Mar­ket scales record high

Money Times - - Market Review - By Deven­dra A Singh

The Sen­sex ad­vanced 528.34 points to set­tle at 33685.56 while the Nifty gained 129.45 points to close at 10452.50 for the week end­ing Friday, 3 Novem­ber 2017.

On the macro-eco­nomic data, In­dia’s fis­cal deficit was at Rs.4.99 lakh crore for April-Septem­ber 2017 or 91.3% of the bud­geted tar­get for the cur­rent fis­cal year that ends on 31 March 2018. Net tax re­ceipts in the first six months of FY18 were Rs.5.42 lakh crore.

In­dia's an­nual in­fra­struc­ture out­put in Septem­ber 2017 surged 5.2% from a year ago, driven by higher pro­duc­tion of coal and re­fin­ery prod­ucts. Dur­ing April-Septem­ber 2017, the an­nual out­put growth was 3.3%. Coal pro­duc­tion grew 10.6% in Septem­ber 2017 from a year ago while re­fin­ery prod­ucts out­put grew 8.1%. In­dia's eight in­fra­struc­ture sec­tors in­clude coal, crude oil, nat­u­ral gas, re­fin­ery prod­ucts, elec­tric­ity, steel, ce­ment and fer­tiliser, ac­count­ing for ~40% weight in the in­dex of in­dus­trial pro­duc­tion.

In­dia is likely to stick to its fis­cal deficit tar­get of 3.2% of GDP and may ac­cel­er­ate sales of gov­ern­ment stakes in lenders and other com­pa­nies as part of its ef­fort to re­cap­i­talise banks, an ad­viser to the In­dia's PM stated.

The gov­ern­ment has al­ready used up nearly all of its bud­get for the cur­rent fis­cal year and tax rev­enues are ex­pected to fall far short of ini­tial ex­pec­ta­tions. At the same time, eco­nomic growth has slowed, spark­ing calls for more stim­u­lus. Mr. Sur­jit Bhalla, a mem­ber of the Prime Min­is­ter’s Eco­nomic Ad­vi­sory Coun­cil (PMEAC), stated that the gov­ern­ment had stuck to its fis­cal deficit tar­gets over the past three years and is ex­pected to do so this year as well. The cen­tral bank has warned that miss­ing the fis­cal deficit tar­get could lead to a spike in in­fla­tion, hurt­ing the macroe­co­nomic sta­bil­ity.

In­dian stocks slid last month on re­ports that a stim­u­lus pack­age of up to Rs.500 bn ($7.7 bil­lion) might be in the works - one that would widen the deficit to 3.7% of GDP. Eco­nomic growth slipped to its low­est level in three years in the first quar­ter, log­ging an an­nual rate of 5.7%. But Bhalla said that there were signs of re­cov­ery. “I am more op­ti­mistic on the econ­omy than I was two weeks ago”, adding that last week's in­dus­trial out­put and ex­port data sug­gested that the fears about a slow­down were ex­ag­ger­ated. He also said that the GDP growth could be close to 6.5% for the fis­cal year al­though the fore­cast is lower than the cen­tral bank's lat­est es­ti­mate of 6.7%.

Last week, new es­ti­mates were re­leased by SBI’s Eco­nomic Re­search De­part­ment. While there could be a short­fall of Rs.1.1 lakh crore in the rev­enue re­ceipts, dis­in­vest­ments re­ceipts worth Rs.72500 crore and ex­pen­di­ture cuts are likely to off­set the im­pact.

“We es­ti­mate that the gov­ern­ment may cut about Rs.70000 crore from the cap­i­tal ex­pen­di­ture”, the re­port said. How­ever, it noted that bud­geted dis­in­vest­ment re­ceipts are on track to re­al­iz­ing Rs.72500 crore. Fur­ther, the re­port ob­served that the gov­ern­ment has ac­cu­mu­lated Rs.40491 crore in the Na­tional Small Sav­ings Fund dur­ing the first five months of this fis­cal. It could thus re­ceive Rs.1 lakh crore in small sav­ings in FY18 and would be able to do a buy­back of Rs.75000 crore, which was con­tin­gent upon that. This in turn im­plies that the gov­ern­ment would be able to meet its net bor­row­ing tar­get of Rs.3.48 lakh crore, it added.

Out of the to­tal es­ti­mated short­fall of Rs.1.1 lakh crore in rev­enue re­ceipts, around Rs.77,000 crore short­fall may be from tax rev­enue on ac­count of re­duc­tion in ex­cise duty on petroleum prod­ucts, tax re­funds un­der GST and rev­enue com­pen­sa­tion to states for GST im­ple­men­ta­tion. The non-tax rev­enue may de­cline by Rs.38000 crore be­cause of lower spec­trum pro­ceeds among oth­ers, the SBI re­port said.

On the US front, Pres­i­dent Don­ald Trump tapped Fed­eral Re­serve Gov­er­nor Jerome Pow­ell to be­come head of the US cen­tral bank, break­ing with precedent by deny­ing Ms. Yellen a sec­ond term but sig­nalling a con­tin­u­a­tion of her cau­tious mon­e­tary poli­cies.

Mr. Trump said, “If we are to sus­tain all this progress, our econ­omy re­quires sound mon­e­tary pol­icy and pru­dent over­sight. We need strong and steady lead­er­ship at the US Fed­eral. He will pro­vide ex­actly that”.

Key in­dex moved up on Mon­day, 30 Oc­to­ber

2017, on buy­ing of eq­ui­ties on pos­i­tive cues. The

Sen­sex gained 108.94 points (+0.33%) to set­tle at 33266.16.

Key in­dex edged lower on Tues­day, 31 Oc­to­ber

2017, on profit-book­ing. The Sen­sex was down

53.03 points (-0.16%) to set­tle at 33213.13.

Key in­dex surged on Wed­nes­day, 1 Novem­ber

2017, on con­sol­i­dated buy­ing by for­eign funds.

The Sen­sex ad­vanced 387.14 points (+1.17%) to set­tle at 33600.27.

Key in­dex fell on Thurs­day, 2 Novem­ber 2017, on sell­ing of eq­ui­ties. The Sen­sex was down 27.05 points (-0.08%) to close at 33573.22.

Key in­dex set­tled higher on Friday, 3 Novem­ber 2017, on pos­i­tive buy­ing of eq­ui­ties by FIIs. The Sen­sex gained 112.34 points (+0.33%) to set­tle at 33685.56.

Events like na­tional and global macro-eco­nomic fig­ures as well as the earn­ings sea­son will dic­tate the move­ment of the markets and in­flu­ence in­vestor sen­ti­ment in the near fu­ture.

On In­dia’s macro-eco­nomic data, the HSBC Man­u­fac­tur­ing PMI and HSBC Ser­vices PMI for Oc­to­ber 2017 is sched­uled for re­lease in the first week of Novem­ber 2017.

On the in­fla­tion data, the gov­ern­ment is sched­uled to re­lease data based on WPI and CPI for Oc­to­ber 2017 for ur­ban and ru­ral In­dia by mid-Novem­ber 2017.

USA’s macro-eco­nomic data for Oc­to­ber 2017 is sched­uled for re­lease in the first week of Novem­ber 2017.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.