Both the indices closed at five-month highs, led by financial services, IT and metal stocks, amid persistent foreign fund inflows.
However, growth is expected to bounce back to an average of 7.3 per cent in the second half of 2017 and 7.7 per cent in 2018
Industry players said they were indeed seeing a serious fall in capacity usage, though some sectors were seeming to prevent further fall in the overall capacity utilisation.
This is the ninth consecutive month that the manufacturing PMI remained above the 50-point-mark.
Retail inflation remained above the RBI's comfort level for the second consecutive month despite slipping slightly to 6.26 per cent in June while the factory output recorded a growth of 29.3 per cent in May, mainly on account of the base effect, the government data showed. The marginal slippage in the Consumer Price Index (CPI)-based inflation was noticed despite little firmness witnessed in the food inflation which inched up to 5.15 per cent in June from 5.01 per cent a month ago. Retail inflation based on Consumer Price Index (CPI) was 6.3 per cent in May 2021 and 6.23 per cent in June 2020.
FY22 will be the year to rebuild with the IMF projecting output growth at 11.5 per cent, economic survey at 11.0 per cent and the RBI's Monetary Policy Committee at 10.5 per cent.
'If the government spends Rs 10 lakh crore this year then you would be looking at a GDP growth of minus 5 per cent.' 'If you do not do this, you will be looking at GDP growth between minus nine and minus 10 per cent.'
In the current fiscal so far, retail inflation stabilised around 5 per cent, while wholesale price-based inflation averaged around 2.9 per cent during April-December.
FPIs, which are holding large exposures in Indian debt, could also be expected to book some capital gains as yields slide down
Rajan said that even though inflation has breached the 6 per cent mark as against the RBI target of getting it down to 5 per cent by March 2017, the price rise scenario will ebb in future
The new rates, effective Wednesday, is the third reduction by SBI in this financial year having cut the rates by 5 bps each in April and May, while its home loan rates has come down by 20 bps during this period.
Economic affairs secretary S C Garg said that all macroeconomic parameters are performing well.
Costlier vegetables slowly pushed retail inflation, which had remained well within the Reserve Bank's comfortable level of 4 per cent during most part of 2019, peaked to more than three-year high of 5.54 per cent in November.
Net sales growth for the quarter ended December (Q3FY20) was 4.5 per cent on a year-on-year (YoY) basis for companies that have declared their results so far, compared to an 8.4 per cent rise in the first half of the financial year. This indicates that there could be a further rise in days' sales of inventory.
Jaitley said if interest rates were lowered, the economy could grow faster than 7-7.5 per cent.
'There are deeper, underlying, forces at work and we need institutional arrangements to guard against them.'
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.
In the Sensex pack, M&M was the biggest loser, tumbling by 6.66 per cent, followed by TCS dropping 4.14 per cent.
The seasonally adjusted Nikkei India Services Business Activity Index fell to 50.2 in May, from 51.0 in April, pointing to the slowest growth rate in the current 12-month stretch of expansion.
The headline seasonally adjusted Nikkei India Composite PMI Output Index, that maps both the manufacturing and services sectors, rose from 53.3 in June to 54.1 in July.
Currently, the retail inflation is well below the RBI's comfort level. The government has asked the central bank to keep inflation in the range of 4 per cent.
The country must get its act on global alliances right in order to feed its fuel-hungry economy, points out Subhomoy Bhattacharjee.
RBI is expected to discuss about the impact of GST in its monetary policy.
Going forward, the February factory output may be impacted as several industries such as automobiles, technology, pharma and fashion have some exposure to imports of raw and intermediate materials from China.
Since last month, the realty (down 23%), auto (down 16%) and finance (down 14%) indices have underperformed the market by falling over 13%, as against 8% decline in the benchmark indices
RBI lowered economic growth for the current fiscal to 6.9 per cent from the previously projected 7.1 per cent, but saw it bouncing back in a big way to 7.4 per cent in 2017-18.
'There will be no serious effect on Indian economy because one person, one man, however powerful, however influential, however great, cannot have an impact on an economy as big and complex as India.'
'Prime Minister Modi stated several times that we shall not let this challenge go away without converting it into an opportunity to undertake systemic reforms.' 'And hasn't that been reiterated in action?'
The internals of the food inflation are worrying, given a broad-based uptick across categories that tend to be sticky, such as proteins, and a narrower-than-expected reduction in inflation for vegetables.
'Election years tend to see high government expenditure on unproductive schemes, though that money sloshing around can boost private consumption.' 'Again, it can mean higher inflation,' explains Devangshu Datta.
'The Reserve Bank's independence has remained a work in progress, an enduring challenge that the nation has been grappling with on an ongoing basis,' says RBI Deputy Governor Dr Viral Acharya.
In case the repo rate keeps trending downwards, borrowers can expect a downward revision of their MCLR-linked loans.
TCS, Bajaj Auto, Adani Ports and Cipla were the top gainers on BSE Sensex while Coal India, GAIL, Dr Reddy's and Infosys lost the most on the index.
Growth impulses, while improving, remain fragile, and a rate hike will be disruptive to interest costs.
Are we adopting an idea whose time has come and gone? My feeling is, yes, says ex-banker C Joseph Chacko in the fourth article of the series on inflation targeting.
A good monsoon could rein in food inflation. Largely good corporate results mean better days are ahead. Nifty may reach record levels, points out Devangshu Datta.
Raghuram Rajan speaks on the unscheduled rate cut.
Profit taking in index heavweights RIL and HDFC weighed on sentiment while ICICI Bank surged 7%.
Experts have started giving comments on provisions that the govt must make in Budget 2016-17.
A smartly executed reform-recap will be the best booster for the economy, says Ajay Chhibber.
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