Sensex registers huge gains
The Sensex surged 1,213.28 points to settle at 36194.3 while the Nifty closed at 10876.75 rising 350 points for the week ended Friday, 30 November 2018.
On the macro-economic data, India's GDP growth slowed to 7.1% in Q2FY19 due to high crude oil prices and the weakness of the . The Indian economy grew at 7.1% in the July-September 2018 period against 8.2% in the June 2018 quarter.
Still, the gross domestic product (GDP) for the Q2 of the financial year outpaced neighboring China's 6.5% growth. Higher fuel prices and a weak rupee were the primary factors dragging growth, while an uneven and sub-par monsoon, flooding some areas on late withdrawal of the monsoon rains, with instances of crop damage and pest attacks hurt the farm sector.
India Ratings agency said that India’s fiscal deficit target for FY19 may be missed due to a shortfall in revenues and lower-than-targeted disinvestment proceeds.
The FY19 fiscal deficit target has been pegged at 3.3% of GDP or Rs.6.24 lakh crore ($88.45 billion). However, a rating agency estimates the fiscal deficit at Rs.6.67 lakh crore or 3.5% of India’s GDP.
The pressure on government finances is rising mainly from the revenue side, particularly from indirect taxes and nontax revenue, the report added.
PM Modi is seeking a second term in the General Elections of 2019 but his plans to keep the fiscal deficit at 3.3% of GDP have come under pressure due to the muted response from new GST in addition to welfare benefit schemes, particularly for farmers ahead of the 2019 general elections.
The abrupt roll-out of GST last year has hit businesses hard and led to uncertainty around revenue collections. The agency said that despite the reforms helping plug leakages in GST collections, aggregate indirect tax collections grew only 4.3% in the first half of the year compared to a targeted growth of 22.2% for the full year. The GST collection in fiscal 2017-18 was 98% of the budgeted target.
The government is also likely to miss its disinvestment target of Rs.80000 crore in FY19 given that it had received only Rs.15247 crore till end October 2018.
By reducing capital expenditure, the government will again try to reduce the adverse impact of both rising revenue expenditure and shortfall in receipts in the fiscal deficit, the India
The Federation of Indian
(FIEO) has repeatedly called for enchancing the credit flow to the export sector so as not to hurt the growth of exports. According to one estimate, outstanding export credit as on 31
March 2018 stood at Rs.28300 crore which declined to Rs.22300 crore as on 22 June 2018.
The credit squeeze felt by exporters is a part of the overall liquidity crunch in the economy that is also affects industrial growth and which sparked off the recent tiff between the central government and the Reserve Bank of India
The government’s differences with the RBI centres on four issues the government wanted liquidity support to head off any credit freeze risk, a relaxation in capital requirements for lenders, relaxing the prompt corrective action (PCA) rules for banks struggling with accumulated nonperforming assets (NPAs)
or bad loans and support for micro, small and medium enterprises (MSMEs). While the NPA crisis is a legacy of the lending boom during the high-growth years up to 2010 the current liquidity crunch particularly among non-banking finance companies (NBFCs) which follows a series of defaults last month by the privately-run Infrastructure Leasing and Financial Services (IL&FS) and banks hesitating to lend after a series of banking frauds.
Mr. Suresh Prabhu at an event while announcing the ‘Logix India 2019’ global logistics meet to be held in January 2019 stated that one of the main challenges for export is finance. There is a decline in export finance so we have taken up the issue with the Finance Ministry. I think, the Finance Minister is also looking into how we can improve the credit flow into the export sector.
Key index gained on Monday, 26 November 2018 on cooling crude-oil prices improved the market sentiment. The Sensex was up 373.06 points to close at 35354.08.
Key index ended above on Tuesday, 27 November 2018 on buying of equities by foreign funds. The Sensex was up 159.06 points to close at 35513.14.
Key index advanced on Wednesday, 28 November 2018 on the back of the appreciating. The Sensex was up 203.81 points to close at 35716.95.
Key index surged on Thursday, 29 November 2018 on consolidated buying of stocks by FIIs ahead of G20 meet in the city of Buenos Aires, Argentina. The Sensex zoomed 453.46 points to close at 36170.41 on the settlement day. Key index settled higher on Friday, 30 November 2018 on last-day trading session of this month. The Sensex was up 23.89 points to close at 36194.30.
For future events both national & global macro-economic data will dictate the financial markets trend. On the rupee scenario, market participants will closely watch the Indian rupee trend against the US Dollar having is appreciated to INR 69 against the USD.
The Reserve Bank of India (RBI) monetary policy review meet is scheduled on 5 December 2018. The outlook of the meeting will surely dictate the market trend and sentiment.
The HSBC Manufacturing Purchasing Managers’ Index (PMI) and the HSBC Services PMI for November 2018 is scheduled for release in the first week of December 2018. The government is scheduled to release data based on wholesale price index (WPI) and the combined consumer price indices (CPI) for urban and rural India for November 2018 by midDecember 2018.
On the global front, United States and other Euro-nations macro-economic data for November 2018 is scheduled to be released this week of December 2018.