NEW DELHI: India has done an excellent job of not busting its balance sheet in order to chase economic growth, said Shankar Sharma of First Global to ET Now. According to Sharma, India has achieved an above 5% growth rate without busting its debt-equity ratio. "That is terrific quality growth," he said.
Sharma is of the opinion that it is time to adjust growth expectations downwards. He does not see an economic recovery in the second half of the year.
The world is sitting on a growth cliff, said Sharma. "In my view you will see the world fall off that growth cliff in the next 18-24 months," Sharma said. Both US and China have artificially stimulated their economies by pumping in trillions of dollars, Sharma said.
"US will not be able to grow at its current 2% if liquidity were to be withdrawn or tapered," Sharma added.
Gross domestic product of US grew at a 1.7 percent annual rate, the Commerce Department said on Wednesday, stepping up from the first quarter's downwardly revised 1.1 percent expansion pace.
Asked about banking stocks, Sharma said that they have been expensive and have no fair value due to high leverage. "Banks are over-owned, I see more downside in them," Sharma told ET Now.
"Banks in India have been too expensive, I don't believe they are a good buy even at current levels," he added.
"When growth slows, banks are the first casualty. In a downturn they will get hit on both retailand corporate assets," he opined.