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August 2019
Review & Analysis by Yadnya
2. Monetary Indicators
- Inflation : CPI & WPI
- RBI Policy Rates
- 10-Year G-Sec Yield & Overnight MIBOR Rate
3. Deficit
- Deficit as % of GDP
- Current Account Deficit as % of GDP
- Crude Oil & Gold Imports
4. Foreign Investment
- Foreign Exchange Reserves
- FDI
- FPI/FII
5. Banking Health
- Bank Credit & Deposit
- Banks GNPA
©2019 Copyright of Yadnya Academy Pvt. Ltd. | Redistribution Prohibited
Key Highlights
Global Economic growth is expected to slowdown in 2019 at a growth rate 3.3% and is projected to be at 3.6% for 2020.
1 While Emerging Market and Developing Economies (EMDEs) is expected to grow at 4.4% in 2019 and is projected to
pick up at 4.8% in 2020
India’s GDP growth has also slowed to five-year low of 6.8% in FY2018-19. As declared on 30th August, for April-June
2 Quarter FY2019-20, India’s GDP growth falls to 5% the weakest in 6-years from 5.8% in March Quarter.
Indian economy is going through an economic slowdown with a consistent fall in GDP Growth for 5-successive quarters.
3 This dampened GDP growth is mainly due to lower growth in private consumption, subdued demand and weak
investment growth.
Overall Economy health can be improved with the introduction of more Industry friendly and welcoming FDI policies by
4 the government. Considerable rate cut measures are needed by RBI to boost the subdued private consumption and
demand. Good things are low inflations, low interest rates, controlled Fiscal Deficit & CAD, increasing Forex Reserves. Even
banking health is improving with increasing Deposit & Credit rate and decreasing NPAs.
Most of the analyst and experts are of opinion that we have seen the bottom in Indian market and much higher
5 growths are expected in coming years given crude prices remain low and global political climate remains stable.
- High NPAs and Liquidity issue after NBFC crisis in Q2 : 2018-19 4.0%
has adversely impacted Private Consumption and Bank lending 3.0%
- Real GDP is revised downwards by RBI from 7.0% in June policy 0.0%
review to 6.9% in August Bi-monthly MPC meet for FY2019-20 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
%AGE GROWTH
4.0% 3.3% 3.3%
5% 2.0%
3.0% 0% 0.0%
2.0% -5%
-6.5%
-10%
1.0%
-15% IIP Primary Goods
0.0% Capital Goods Intermediate Goods
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Infrastructure
MAY-19
JAN-18
SEP-18
JAN-19
JUN-19
JUN-18
FEB-18
AUG-18
FEB-19
AUG-19
MAR-18
NOV-18
DEC-18
MAR-19
APR-18
APR-19
JUL-18
OCT-18
JUL-19
the slowest in a year, while the employment growth
remained marginal despite output expansion.
75
78
75
- The ratio is a backward-looking indicator comprising
80 72 20,000
69 71
67 historical data. The historical average of India’s Market Cap
64 65
61 to GDP ratio is around 75%.
60 56 56 15,000
50
45 - In current Equity market outlook for FY19-20, India’s Market
40 10,000 Cap to GDP ratio is at 67%, became progressively affordable
in terms of valuation from FY17-18. Some of the good
20 5,000 stocks have corrected almost 15-20%.
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Apr-18
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Oct-18
Apr-19
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
2.00%
3.27% 2.57% -2.00%
1.00%
1.46% 1.97%
0.00% -4.00% -3.85%
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Jul-18
Oct-18
Apr-19
Jul-14
Jul-15
Jul-16
Jul-17
Jul-19
-6.00%
-6.14%
-8.00%
- A Repo rate cut and Accommodate stance taken by RBI was to give an impulse to the weakened growth, by supporting efforts
to boost aggregate demand and reenergize private investment activity
- Decreasing rate cut is supported by low inflation and therefore RBI has the head space for reducing the interest rates to spur
the growth esp. small & medium sector
- We expect more rate cut in the coming month since inflation is still low and growth is still struggling.
6 5.97
7.35 6.00
7 6.88 5.8 5.75
6.55 5.6 5.45
6.5 5.4
5.2
6.37
6 5
Apr-18 Jul-18 Oct-18 Feb-19 May-19 Aug-19 Apr-18 Jul-18 Oct-18 Feb-19 May-19 Aug-19
0.5% - Next slide shows how our Crude oil imports are
increasing whereas Gold imports are range bound for last
0.0% 3 years
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
2000 1000
0 0
Jun-16
Jun-17
Jun-18
Jun-19
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Aug-16
Aug-17
Aug-18
Dec-16
Feb-17
Dec-17
Feb-18
Dec-18
Feb-19
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Jun-16
Aug-16
Jun-17
Aug-17
Jun-18
Aug-18
Jun-19
Dec-17
Dec-16
Feb-17
Feb-18
Dec-18
Feb-19
Crude Oil Import Y-o-Y (in Mn US$) Gold Import Y-o-Y (in Mn US$)
120000 111955 40000
35000 33657 32897
87803 31771
100000
30000 27518
80000 63972 70196
25000
60000 20000
36311
15000 11,448
40000
10000
20000
5000
0 0
2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20
MONTHLY GROWTH
413 414 1%
IN USD BILLION
largest component, Gold reserves, SDR & reserve position in 0.42%
410 0.46%
IMF 0.48%
402 0.31% 0%
401 400
- This increasing trend is majorly due to strengthening of 400 396
392 394
rupee in last few quarters, decreasing Crude prices and -1%
390
currency swaps
380 -2.11% -2%
- Forex Reserves helps in meeting country’s external financial
obligations. It is a big confidence booster for foreign
370 -3%
investors.
- India's foreign exchange reserve touched a life-time high of
USD 429.64 billion in July 2019. Forex Reserve % Growth
Oct-16
Jun-17
Oct-17
Jun-18
Oct-18
Jun-19
Apr-16
Aug-16
Dec-16
Apr-17
Aug-17
Dec-17
Apr-18
Aug-18
Dec-18
Apr-19
Feb-17
Feb-18
Feb-19
Share Of Top Investing Countries in FDI Equity Inflows Share Of Top Sectors in FDI Equity Inflows
% To Total Inflows (In US$) % To Total Inflows (In US$) Services Sector
(April 2000 - March 2019)
Computer Software &
1.6% 1.6% Hardware
Mauritius 2.3% 3%
4%
2.8% Telecommunication
Singapore
4%
Japan Construction
Netherlands 6.1% 18% Development
Trading
UK 4%
32.0%
USA 6.4%
Automobile Industry
Germany 5%
Cyprus 6.5% Chemicals (other than
fertilizers)
UAE 9%
5% Drugs & Pharmaceutical
France 7.2%
6% Construction
8% (Infrastructure)
19.8%
Apr-17
Apr-18
Apr-19
Aug-17
Feb-18
Aug-18
Feb-19
Dec-17
Dec-18
Jun-17
Oct-17
Jun-18
Oct-18
Jun-19
-10000
- Since the announcement of Super-Rich tax in the Union Budget declared
-20000 -3003
on 5th July, FPIs have been selling in equity segment. Increase in surcharge
on income-tax hit FPIs hard, leading to a steep selloff in the Indian -30000
-29776
equities.
-40000 -38906
- But, the main reason for the selling is the sharp slowdown in the economy
-50000
particularly in segments like autos. Besides, the Q1 FY20 results from
corporates have not been reassuring. Thus, slowing domestic growth,
muted earnings season and weak rupee also added to the concerns of FPI.
- Bank Deposit & Credit Growth is moving upward Bank's Deposit Growth & Credit Growth
18.0%
16.2%
- As the bank’s are passing the benefit of reducing
16.0%
interest rates to consumers, banks’ credit growth is 13.5%
expected to rise even further. Credit growth is 14.0%
expected to be around 14% in upcoming in FY as 11.9%
12.0% 10.8%
compared to only 8% in last FY 10.9%
10.0% 10.4%
11.1%
- Deposit growth is increasing in past few months due 8.0%
to problems in debt market – defaults of IL&FS, Zee 6.8%
6.0%
and DHFL. Due to these, investors are moving
towards more stable Bank’s deposits 4.0%
2.0%
- Bank’s are delaying transmission of low interest
rates which is keeping their deposit rates still higher 0.0%
Apr-18 Jul-18 Oct-18 Feb-19 May-19 Aug-19
than ongoing yields which may be short lived
Deposit Growth Credit Growth
Percent %
9E
- For private banks may decline to 3.2% in March 2020 8
from 3.7% in March 2019
6
3.7
- Y-o-Y growth in GNPAs is decelerated across all bank 4 3.2E
3
2.6E
groups.
2
- Key Drivers are : Improvement in banks’
0
Recapitalisation, Provision coverage and Capital PSBs PVBs FBs All SCBs
adequacy, and Efforts to improve balance sheets of
banks etc. Mar-17 Mar-18 Sep-18 Mar-19 Mar-20
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To educate and simplify concepts
of personal finance for every Indian
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