Finance Minister Nirmala Sitharaman is likely to step up efforts to boost consumption and rural economy while keeping inflation under check when she presents her sixth straight Budget on February 1. Experts said one way to boost consumption is to put more money in the hands of people, and one of the possible ways of doing it is by reducing the tax burden through tinkering with tax slabs or increasing the standard deduction. Another proposal is related to increasing the funds under the rural employment guarantee scheme MGNREGA and higher payout for farmers.
Metal and mining companies, such as Tata Steel, JSW Steel, Hindalco, and Coal India, have been among the top-performing sectors on the bourses in recent months. The S&P BSE Metal Index is up 13 per cent in the past three months, rallying 29 per cent in the past year, outperforming the broader market. For comparison, the benchmark S&P BSE Sensex has only seen a 1.7 per cent increase in the past three months, with a 15 per cent gain since the end of September last year.
As markets complete the first half of the calendar year 2022 (CY22) with a fall of around 9 per cent, the interest-rate hike trajectory by global central banks, paired with the conundrum of inflation and growth, will move the needle for the market, observe experts. Here's a quick rundown on what they'll react to over the next six months.
The change in the baseline for IIP and WPI, currently at 2004-05, is expected to bring in more accuracy in mapping the level of economic activity and calculating other numbers like national accounts.
RBI Governor Raghuram Rajan on Friday said keeping inflation low is the key task for sustainable economic growth of the country.
But it is likely that campaign spending resulted in some positive activity through this period.
The Seventh Pay Commission had decided to choose the CPI-IW as the index for adjusting inflation for central government employees.
The broader markets ended in line with the benchmark indices- BSE Midcap and Smallcap indices ended higher by 1.3% and 0.9% each.
Finance Minister Arun Jaitley on Saturday said that retail inflation is expected to remain close to 5 per cent
The real benefits can be seen when prices stabilise, preferably at levels acceptable to both consumers and producers.
The Central bank primarily factors Consumer Price Index while deciding on policy rate.
Inflation in rural and urban areas in July was 8.45 per cent and 7.42 per cent, respectively.
The S&P BSE Sensex dropped 1 points to end at 26,396 and the Nifty50 slipped 2 points to end at 8,109.
In a surprise move, the Reserve Bank on Wednesday left the repo rate unchanged at 7.75 per cent, while the cash reserve ratio too is retained at 4 per cent.
From the Sensex pack, HCL Technologies, Infosys, Wipro, Bharti Airtel, Larsen & Toubro, Mahindra & Mahindra, Tata Consultancy Services and Asian Paints were the major gainers. Axis Bank, IndusInd Bank, Bajaj Finance, JSW Steel, State Bank of India and Tata Steel were among the major laggards.
The rate of price rise in vegetables stood at 15.15 per cent in August as against 16.88 per cent in the previous month.
Jaitley said inflation has been under control for long and is likely to remain so on the back of good monsoon and unlikely spike in oil prices.
The Index of Industrial Production (IIP) grew by 1.4 per cent in November as most components like manufacturing, electricity, mining, primary goods, and consumer durables witnessed a slowdown, according to data released by the National Statistical Office (NSO) on Wednesday. This is on the base of a decline of 1.7 per cent in November 2020 and before the new Covid variant started impacting economic activity. IIP growth was lower than the 4 per cent expansion recorded in the previous month but was better than a 1.6 per cent contraction seen in November 2020. Separately, rising prices of kitchen staples pushed retail inflation, or rate of price increase, to 5.59 per cent in December 2021, bringing it close to the upper band of Reserve Bank's comfort zone.
November IIP data show a fall of over 20%, led by automobiles, gems & jewellery and home appliances; turnaround seen as unlikely.
The RBI, which mainly factors in CPI for arriving at its bi-monthly monetary policy, has been mandated by the government to ensure that inflation remains at 4 per cent, with deviation of 2 per cent on either side.
Slowdown in industrial production notwithstanding, a marginal increase in inflation raised the clamour for another round of rate cut by the Reserve Bank on April 4 to boost economic activity.
Inflation trajectory does not match the slump in demand, prolonged pause on rates likely.
'An eerie similarity with 2019 inflation trajectory could now mean that the RBI and market inflation estimates could go awry.'
The RBI's Monetary Policy Committee brainstormed the impact of any future shocks on the inflation trajectory and stressed monitoring the cumulative effect of monetary policy actions over the past one year, which is still unfolding, revealed minutes of the rate-setting panel released on Thursday. The minutes of the meeting of the Monetary Policy Committee (MPC), headed by Reserve Bank Governor Shaktikanta Das, also indicated it would be premature to declare an end to the monetary tightening cycle, which started in May 2022 to check high inflation following the outbreak of the Russia-Ukraine war. The central bank, which effected six back-to-back hikes in the key short-term lending rate (repo) since May 2022 to check high inflation, decided to take a pause early this month.
Retail inflation fell to a five-month low of 4.35 per cent in September from 7.27 per cent in the year-ago period as prices of vegetables and other items declined, according to government data released on Tuesday. The moderation in Consumer Price Index-based inflation is in line with the assessment of Reserve Bank Governor Shaktikanta Das who recently projected substantial softening of retail inflation. The CPI inflation was at 5.3 per cent in August and at 7.27 per cent in September 2020.
A rise in petrol and diesel consumption can help the government cut cesses on the fuels by Rs 4.5 a litre without impacting revenue collections of FY21, and help cool off the pressure on inflation, domestic rating agency ICRA said on Friday. Petrol consumption is estimated to increase 14 per cent in 2021-22 and diesel by 10 per cent on the lower base, rise in mobility and economic recovery, ICRA said. The rating agency added that it will result in an additional Rs 40,000 crore in revenue for the government through higher collections of the cess.
The price of export quality lady's finger, for example, shot up 150 per cent in two weeks to close on Thursday at Rs 40 a kg against Rs 16 a kg on September 16 in the Agricultural Produce Marketing Committee, Vashi, near Mumbai.
Disagreeing with Reserve Bank's projection on the price situation, former RBI Governor and PM's Economic Advisory Council chairman C Rangarajan said WPI and CPI may not be as high as being projected by the central bank.
Most market analysts are expecting the momentum to shift towards 'quality' and 'growth' stocks in 2024 after the outperformance of 'value' stocks over the past three years. 'Value' stocks are generally well-established companies with steady profits that are trading at a discount to what they are intrinsically worth. Companies in sectors such as commodities, industrials, commercial vehicles and public sector units (PSUs) fall in this bracket.
To the extent that monetary variables affect investment, the weather, thus, looks far less clement.
The biggest bounce is in the realty sector, where the industry index jumped 80%. There's been a turnaround also in automobiles and ancillaries (up 45%). The pharma and health care indices have a welcome return of roughly 35%.
The cooking oil national industry body -- Solvent Extractors' Association (SEA) of India has suggested immediate initiation of government to government (G2G) dialogue with Indonesia on the proposed palm oil export ban from April 28 by them as it would have an adverse repercussions in India. Indonesia, which is the world's largest producer of palm oil and meets nearly 50 per cent of the total palm oil requirement in India annually, had announced to ban exports till further notice apparently to contain edible oil prices in their domestic market. "We have suggested our government initiate dialogue with Indonesian counterparts at the highest diplomatic level on the cooking oil export ban.
The Consumer Confidence Index score for India decreased by six points to 128 in the April-June quarter of 2017, from a high of 136 from the last polled survey in Q4 of 2016, market insight first Nielsen has said in a statement.
If imputed inflation for April and May is used, then you have inflation of over 6 per cent for two consecutive quarters, which is a worrying signal for the RBI.
GDP growth in November is the second-highest since January 2012 when it had expanded 5.7%.
Profits of India's top listed companies have been growing at a faster pace than those of their American peers, but when it comes to revenue growth, the order has reversed recently. The combined net profit of the S&P 500 companies was up 14.1 per cent year-on-year (Y-o-Y) during the trailing 12 months (TTM) ended December 2023, as against 17.4 per cent profit growth logged by the BSE 500 companies in the same period. This is the second consecutive year of faster profit growth for the BSE 500 companies.
The Reserve Bank's rate-setting panel will start its 3-day deliberations on Wednesday amid expectations of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed. Based on the recommendations of the Monetary Policy Committee (MPC), the RBI had effected 50 basis points increase in repo rate each in June and August after raising the short-term lending rate by 40 basis points in an off-cycle decision in May. The MPC, headed by RBI Governor Shaktikanta Das, is scheduled to meet during September 28-30.
Notwithstanding the recent sharp decline in the stocks of public sector companies, analysts at Jefferies remain bullish on this segment. State Bank of India, Coal India, and NTPC are their top picks in this space, they said in a recent note. The public sector undertaking (PSU) or state-owned enterprise (SOE) index, with a 70-percentage-point outperformance versus the National Stock Exchange Nifty50 over the past 12 months, comes after a decade of underperformance before 2020.
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The food inflation in July softened to 11.24 per cent from 11.84 per cent in the previous month, according to the official data released on Monday.
Changes the base year and included more sectors.
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