Green Shoots of Recovery are Still Fragile

There is one simple yet core principle behind any country's stock market success, that its ECONOMY has to perform. In, general markets takes clues form the economy and recovers, however last year the markets started recovering and then the economy started to follow.

The following I believe could be the recovery shape for the TOP global economies if the markets recovery has to sustain:

• The $14.4tn US economy, the growth might slowdown if the government starts withdrawing the stimulus, however the the confidence among the consumers is a key to the world's biggest consumption driven economy
• The $13.5tn Euro Area, is currently suffering from one of its biggest nightmare that is the sovereign default crisis. If nothing concrete and fast is undertaken shortly, this could lead to a total chaos in the financial markets and could lead EURO to slip further which could hurt the export dependent Europe and Germany
• The $4.9tn Japanese economy, is trapped in the classical liquidity trap since decades where the spiral of negative inflation and low interest rates is not letting it recover. The NPAs woes from the banking space and lack of consumption will continue to hinder the growth
• The great $4.32bn Chinese economy is expected to do well riding high on opportunities like high corporate profitability, buoyant consumer spending, loose fiscal policy and more scope for monetary and fiscal stimulus. The concerns are too much of liquidity creating a bubble, which thankfully the government has started to tackle and lack of mass participation in the growth

• $2.64 bn sized UK economy, the growth path is really sluggish on account of the fiscal restraint which will pose an obstacle to the country's growth for the next 4-5 years

• Our $1.2 tn Indian Economy, has also recovered given the huge government stimulus and rising industrial growth. However, the rising food price inflation which could lead to a hike in the interest rates and withdrawal of fiscal stimulus could take the shine away

Thus, even though most the economies are showing the Green shoots of recovery, it is still fragile and if not taken care well can change the party mood.