According to Moody's, the positive movement of the stock market and mixed economic indicators are expected to be short lived and the worst is not over for the Indian economy.

Moody's economy.com said in a research report that "The positive sentiment is expected to be short lived, as India essentially only started feeling the pinch of the global downturn in the December quarter and the worst is yet to come."

The industrial production growth slipped into negative territory for the third time in the current fiscal by 0.5% in January while exports also dropped by 15.9% on YoY basis in the month.

However, expectations of further monetary easing measures by the Reserve Bank increased after inflation fell to 0.44% for the first week of March against 2.43% a week ago.

Since October, RBI has infused over INR 400,000 crore in the system by cutting ratios and signaling interest rate cut. There is also some positive news from Dalal Street as the Bombay Stock Exchange benchmark index Sensex surged 245 points in this week.

Moody's added that the Indian economy is likely to grow by 6.3% with some downward risk in the current fiscal against government estimate of 7.1%.

(Sourced from The Financial Express)