India's economy is unlikely to see double-digit growth and may grow between 8 per cent and 9 per cent this fiscal year (2021-22, or FY22), against the estimated 11.5 per cent, according to leading economists and rating agencies. The downward revision of growth projections to as low as 10 per cent is mostly on account of stringency in restrictions by states, relatively slow vaccination pace, and the possibility of a third wave of the pandemic. However, they say the impact will not be as severe as the first wave, and expect the first quarter to see positive growth.
The risk-reward for the Indian markets, Morgan Stanley said, is turning favourable.
Fitch Ratings on Friday said it has revised the outlook on India's sovereign rating to 'stable' from 'negative' as downside risks to medium-term growth have diminished on rapid economic recovery. Fitch Ratings kept the rating unchanged at 'BBB-'.
It said that while the Union Budget for 2009-10 is expansionary and conducive to growth, the failure of the monsoon and its significantly adverse impact on agriculture and industry will shave off 0.8 percentage points from the GDP growth rate.
TCS, Wipro and Infosys dropped by up to 4.47 per cent, dragging down the BSE IT index by 2.96 per cent
The Reserve Bank of India (RBI) on Wednesday raised the benchmark lending rate by 35 basis points to 6.25 per cent in a bid to tame inflation, which has remained above its tolerance level for the past 11 months. With the latest hike, the repo rate or the short-term lending rate at which banks borrow from the central bank now has crossed 6 per cent. This is the fifth consecutive rate hike after a 40 basis points increase in May and 50 basis points hike each in June, August and September.
The Reserve Bank of India's rate-setting panel will go for a 0.35 per cent hike in the key repo rate at its meeting next week, an American brokerage said on Wednesday. The hike will be accompanied by a change in the policy stance to "calibrated tightening", Bofa Securities said in a report published ahead of the Monetary Policy Committee (MPC) resolution which is set to be announced on August 5. RBI has hiked the rate by a cumulative 0.90 per cent in two tightening moves in May and June, responding to the runaway headline inflation which has consistently overshot the upper end of the target set for the central bank for many months.
'India is nowhere near the peak of the infection given its large population of 1.3 billion'
India is likely to clock a GDP growth of 5.5 per cent during the current financial year provided there is normal monsoon and stable government at the centre, says a D&B report.
Bajaj Finance was the top laggard in the Sensex pack, tanking up to 8 per cent, followed by M&M, Tata Steel, Bajaj Auto, ONGC, HDFC Bank and Kotak Bank. On the other hand, TCS, Tech Mahindra, HUL, Axis Bank and ITC were the top gainers.
Fitch Ratings on Tuesday affirmed India's sovereign credit rating at 'BBB-' with a stable outlook, saying the rating derives strengths from the country's robust growth outlook and still-resilient external finances. It said India's robust medium-term growth outlook is a key supporting factor for the rating. A clear improvement in corporate and bank balance sheets, which were under strain prior to the pandemic, is likely to facilitate a steady acceleration in investment in the coming years.
Have the markets already played out their dynamics before the economy has even properly taken off? Are we now destined for a period of mediocre returns despite a strong economy? asks Akash Prakash.
BofA Securities has revised its year-end Nifty target from its earlier projection of 16,000 to 14,500 now - down over 6 per cent from the current levels. Fast tightening monetary conditions, slowing growth/fears of US recession and the likely Nifty EPS (earnings per share) cuts, BofA Securities said, are the key headwinds for the markets in the near-term. However, clarity on macro and monetary policy outlook in the US/India, it said, is the silver lining that could see markets bottom out by August/September 2022.
Indian economy is set for a 'goldilocks' period -- used to describe a timeframe of high growth and low inflation -- while it can become Asia's fastest growing economy in 2016, Japanese financial major Nomura said.
Official data released on Friday said the GDP is estimated to have grown by 5.7 per cent for the April-June period, as against a 4.6 per cent growth notched for the same period year ago.
Reserve Bank of India (RBI) is unlikely to cut the benchmark interest rate at its upcoming monetary policy review meeting, taking place soon after the announcement of the Lok Sabha election results, amid inflation challenges, said experts. The Monetary Policy Committee (MPC) may also refrain from rate cut as economic growth is picking up, notwithstanding the elevated interest rate of 6.5 per cent (repo) prevailing since February 2023. The meeting of the Reserve Bank Governor Shaktikanta Das headed MPC is scheduled for June 5 to 7.
Government has forecast annual economic growth to rise to 7.4%.
A survey by industry body Ficci has lowered the country's economic growth forecast for 2013-14 fiscal to 5 per cent, from 6 per cent projected in July, indicating tough times ahead.
At a pre-Budget meeting, the FM was asked to ensure that NBFCs come out of the liquidity crisis they are facing with the help of RBI. They also spoke about the futility of trying to achieve a 3 per cent fiscal deficit target over the medium term.
A top panel of economists on Monday slashed its forecast for US economic growth this year, saying the threat of war with Iraq was dampening consumer spending and business activity.
A reading above 50 indicates expansion, while a score below this mark means contraction
Global trends and trading activity of foreign investors would largely dictate terms in the equity markets this week amid a lack of major domestic triggers, analysts said. Markets may face near-term consolidation due to elevated valuations, they noted. "While the previous week was predominantly shaped by developments in the US Federal Reserve policy, attention will now shift to the Bank of Japan's policy decision on December 19," Santosh Meena, Head of Research, Swastika Investmart Ltd, said.
IMF Chief Economist Gita Gopinath also said the pickup in global growth for 2020 remains highly uncertain as it relies on improved growth outcomes for stressed economies like Argentina, Iran, and Turkey and for under-performing emerging and developing economies such as Brazil, India, and Mexico.
With economic activity still to reach pre-pandemic levels, the RBI may slow down the pace of rate hikes until next year to quell soaring inflation while supporting growth, the Asian Development Bank (ADB) says in its latest report. The Manila-based multilateral funding agency has raised the inflation forecast for the current fiscal year ending in March 2023 to 6.7 per cent from its earlier projection of 5.8 per cent. For the next fiscal year too, the forecast has been revised upwards to 5.8 per cent from 5 per cent earlier.
Dr Nagesh Kumar, one of the three new MPC members, wanted the MPC to reduce the repo rate by 25 basis points to 6.25%.
Ahead of the Economic Survey, industry body Ficci today lowered its GDP growth forecast for the current fiscal, pegging India's economic expansion rate at 5.3 per cent compared to its 5.5 per cent previous estimate.
It would be larger than even in the pandemic year of 2020-2021, notes Mahesh Vyas.
India's services sector activity expanded at the slowest pace in over two years in January amid softer increases in sales and output, a monthly survey said on Wednesday. The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.3 in December to 56.5 in January -- its lowest level since November. In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
Fitch Ratings on Wednesday said India's high fiscal deficit would pose a challenge in lowering the debt to GDP ratio, which is expected to rise above 90 per cent in the next five years. It said India entered the pandemic with little fiscal headroom from a rating perspective. Its general government debt/GDP ratio stood at 72 per cent in 2019, against a median of 42 per cent for 'BBB' rated peers.
Analysts expect modest recovery in Indian economy.
Fitch on Tuesday affirmed India's sovereign rating at 'BBB-' with a stable outlook, on robust growth and resilient external finances, but said weak public finances remain a challenge. India's rating has been unchanged at 'BBB-', which is the lowest investment grade, since August 2006. "Fitch Ratings has affirmed India's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook," it said in a statement, adding strong growth potential is a key supporting factor for the sovereign rating.
Market breadth remained strong with 1,581 advances over 1,018 declines on the BSE
FM is seen to step up the pace of sales of state assets and curb spending
It's always been a struggle for economists and statisticians to forecast India's gross domestic product (GDP) correctly, and say where the economy is headed before the official numbers come out. If estimating the GDP is tough, forecasting it in real time is complicated. It involves looking at tens of indicators, such as industrial production, electricity consumption and exports, to arrive at a number.
The government's Rs 20.97 lakh crore COVID-19 package lacks in addressing the immediate concerns of the economy as the actual fiscal impact of the additional stimulus is only about 1 per cent of the GDP as opposed to the claim of 10 per cent, Fitch Solutions said on Tuesday. Prime Minister Narendra Modi on May 12 announced a stimulus package of Rs 20 lakh crore, or nearly 10 per cent of GDP, to deal with the economic fallout of COVID-19. The contents of the package were broad-based and announced in five tranches.
Moody's expect RBI to hold policy 'repo' rate steady to have a neutral stance in this growth
S&P Global Ratings on Tuesday affirmed India's sovereign rating at the lowest investment grade of 'BBB-' for the 14th year in a row with a stable outlook, and said that the country's strong external settings will act as a buffer against financial strains despite elevated government funding needs over the next 24 months. The sovereign credit ratings on India reflect the economy's above-average long-term real GDP growth, sound external profile, and evolving monetary settings, S&P Global Ratings stated. "India's democratic institutions promote policy stability and compromise, and also underpin the ratings. "These strengths are balanced against vulnerabilities stemming from the country's low per capita income and weak fiscal settings, including consistently elevated general government deficits and indebtedness," it said in a statement. S&P Global Ratings has forecast economic activity in India to begin to normalise throughout the remainder of fiscal 2022, resulting in real GDP growth of about 9.5 per cent.
The country's new economic roadmap highlights the importance of creating a virtuous cycle of investment, savings and exports in order to sustain rapid economic growth over the next five years.
