CURRENT MACROECONOMIC TREND

INDICATORS IN INDIA & ITS IMPACT

ON STOCK MARKET
Presented by:-
Amrita Das
Khushboo Jain
Nishant Singh
Meaning of macroeconomic indicators
Macroeconomic indicators are statistics that
indicate the current status of the economy of a
state depending on a particular area of the
economy .
Various macroeconomic indicators
GDP
FII
Interest Rate & Inflation
Oil price
Political news
Government announcements
Fiscal deficit
GDP
A bad year for mining and
manufacturing
Below is a breakdown of growth rates in
various sectors for the full 2013-14
financial year:
Agriculture, forestry and fishing: +6.3%
Mining and quarrying: -0.4%
Manufacturing: -1.4%
Electricity, gas and water supply: +7.2%
Construction: +0.7%
Trade, hotels, transport and
communication: +3.9%
Financial, insurance, real estate and
business services: +12.4%
Community, social and personal services:
+3.3%
Impacts of GDP on stock market
Government raised fares for passengers by 14.6 per cent while
freight rates were raised by 6.5 per cent
Railway stocks were up 0.38 per cent on average. In comparison, the
benchmark Sensex was down 0.3 per cent
Push up costs for multiple sectors which rely on the rail network for
transportation of raw materials and other goods
Coal sector
Cement
Power sector
Infrastructure
Real Estate

GOVERNMENT ANNOUNCEMENTS

a)Interim railway budget
Contd
Railway stocks have been on an upmove since last week after news
that government is considering 100 per cent FDI in several
segments of the railway sector

b)Export duty
The general excise duty on all machinery & equipment, appliances
etc has been reduced from 12% to 10%.
The excise duty on small cars, motor cycles, scooters, commercial
vehicles and trailers has been reduced from 12% to 8% and on SUVs
from 30% to 24%. The excise duties on large and mid segment cars
have been reduced from 27% and 24% to 24% and 20%
respectively.

c) Sugar policy
Government announced additional interest-free
loan of Rs 4400 crore for sugar mills.
Shree Renuka Sugar saw its share price soar by
nearly 9%.
Balrampur China gained 8%.
Bajaj Hindustan rose 8.6%.
FII
FII contd
FIIs have been putting in money for past 22
years pushing up sensex from 2000 to 21000
Net inflow of overseas funds since the beginning
of 2014 have reached Rs. 1.23 lakh crores
pushing up the sensex by 6% since January
Companies such as Alembic Pharmaceuticals,
Finolex Industries, PI Industries and Mindtree
have risen over 100% on the back of FII inflows
CRUDE OIL
Crude oil plays a major role on Indian economy.
Recently crude oil slipped below $114 a barrel.
Sensex snapped 4-day losing streak, zoomed by 287
points. This was a result of emergence of buying
funds and retail investors.
An increase poses negative impact on industries like
power, petroleum, transportation, manufacturing,
etc while banking, software and financial firms are
better place to invest.
Currently, BPCL, HPCL, IOC & GAIL India are
trading at 1-2% after largest one-day decline in 7
weeks.
POLITICAL NEWS
In most election years, the market has actually
fallen just before the elections-2004, by more
than 10%.
In 2004, first three months the Sensex was down
6% though over the year it was 16%.
Political news related to any particular state will
have major impact on companies located in that
state.
With BJB in 1999, Sensex jumped 17%, but one
year after elections Sensex dropped 13%.

FISCAL DEFICIT
Revised fiscal deficit in 2013-14 was 4.5% of the
GDP
Widening of this gap puts pressure on the govt.
to spend more on subsidies and generation of
lower tax revenues
Due to this govt. attracts less investments in
sectors like power, infrastructure, education,
health care projects, thereby affecting
productivity and GDP growth
INTEREST RATE
On June 4, 2014 RBI reduced the SLR by 50
basis points and decided to infuse Rs. 35000
crores liquidity in the banking system to control
prices and push growth
This had a direct effect on sensex which was up
by 51.12 points or 0.21%
The share prices of ICICI Bank, HDFC Bank,
Axis Bank and other psu bank stocks like SBI,
Canara Bank and PNB gained
On 28
th
Jan, 2014 RBI increased its repo rate
from 7.5% to 8% in order to lower inflation


INFLATION
To control inflation govt. hiked interest rates which
make debt instruments more attractive than equities as
they carry lower risk
When interest rates rise the borrowing cost of firms rises
which lowers demand, effect growth and revenues and
impact stock market
On June 24, 2014 fall in the global crude oil prices eased
inflation and sensex rose about 338 point causing a
positive turn in sectors like realty,consumer durables,
power, banking and metal.
Major Sensex gainers were GAIL, HDFC, BHEL, SBI,
Axis Bank, ITC.