Market recovers at F&O settlement
The Sensex witnessed a strong correction of 639.96 points to settle at 31282.48 while the Nifty closed at 9768.95 losing 195.45 points for the week ending Thursday, 28 September 2017. India’s April-June 2017 current account deficit (CAD) widened to its highest in four years as imports surged but strong capital inflows comfortably financed the gap. Exports grew 10.29% to $23.81 billion in August 2017. The Indian economy will do well with extra fiscal stimulus and there will be no harm if the centre busts its fiscal deficit target to create space for higher capital spending, a top government policy adviser said. Such comments from Rajiv Kumar, deputy head of policy think-tank Niti Aayog, come at a time when PM Modi’s administration is deliberating on measures to revive an economy which recorded its slowest growth in three years in the June 2017 quarter. According to HSBC, India is likely to overtake Japan and Germany to become the third largest economy in the next 10 years in nominal dollar and the transition will happen even more quickly on a PPP (purchasing power parity) basis but needs to be consistent in reforms and focus more on the social sector. According to HSBC, demographics and macro stability are the key strengths of the country. Its estimates show that India will be a $7 trillion economy in 2028 as compared to less than $6 trillion and $5 trillion for Germany and Japan, respectively.
Currently, India’s GDP is around $2.3 trillion (FY17) and stands at the fifth spot in global rankings. The brokerage said that the growth rate, which will be lower in FY18 as compared to the year-ago’s 7.1% due to the introduction of GST will recover from next year in a sustainable manner.
Citing the case of GST, the report said that informal enterprises that create the bulk of jobs in the country may respond to higher taxation by shutting shop or laying off workmen. With concerns being raised about jobless growth, it said that the e-commerce sector will create 12 million jobs over the next decade, which is half of the 24 million shortfall. Another avenue of job creation can be the social sector where a lot of work needs to be done on health and education fronts, the report added.
The HSBC report also said that India will continue to be a service-oriented economy but it needs to pay extra attention on manufacturing and farm sectors as well.
“India needs to broaden its specialisation beyond just IT in business and cricket in sports if it wants to run harder and fly higher”, the HSBC report said.
World Economic Forum (WEF) in its latest Global Competitiveness Report shows that India has slipped from the 39th position to 40th while neighboring China is ranked at 27th. On the list of 137 economies, Switzerland leads in the first position and is followed by USA and Singapore.
“India stabilises this year after its big leap forward of the previous two years, adding that the score has improved across most pillars of competitiveness. These include infrastructure (66th rank), higher education and training (75) and technological readiness (107), reflecting recent public investments in these areas”, the report added. According to the report, India’s performance also improved in ICT (information and communications technologies) indicators, particularly Internet bandwidth per user, mobile phone and broadband subscriptions and Internet access in schools.
However, the WEF said that the private sector still considers corruption to be the most problematic factor for doing business in India.
A big concern for India is the disconnect between its innovative strength (29) and its technological readiness (up 3 to 107). As long as this gap remains large, India will not be able to fully leverage its technological strengths across the large economy, it noted.
The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness - Institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.
Key index plunged on
Monday, 25 September 2017, on a sell-off by traders due to
North Korea worries. The
Sensex dipped 295.81 points
(-0.93%) to close at 31626.63.
Key index ended lower on
Tuesday, 26 September 2017, on global cues. The Sensex was down 26.87 points (0.08%) to settle at 31599.76.
Key index corrected on Wednesday, 27 September
2017, on extended selling by foreign funds. The Sensex fell
439.95 points (-1.39%) to close at 31159.81.
Key index advanced on Thursday, 28 September
2017, on fresh marginal buying of equities. The
Sensex was up 122.67 points
(+0.39) to close at 31282.48.
Events like national and global macro-economic figures will dictate the movement of the global markets and influence investor sentiment in the near future.
On India’s macro-economic data, the HSBC Manufacturing PMI and
Services PMI for September
2017 is scheduled to be released in the first week of October 2017.
On the inflation data, the government is scheduled to release data based on WPI and CPI for urban and rural India for September 2017 by mid-October 2017.
USA’s macro-economic data for September 2017 is scheduled to be released in the first week of October 2017.