Do it yourself

CAD slips in FY2023; better prospects in FY2024 (Kotak Securities) CAD/GDP improved in 4QFY23 led by a narrowing of the trade deficit (goods and services). Capital account surplus moderated from last quarter due to outflows in FPI and banking capital. CAD/GDP in FY2023 was at 2% and BOP at (-)US$9.1 bn with most of the pressure seen in 1HFY23. The external sector balance is likely to be much more comfortable in FY2024 amid a narrowing of goods trade deficit and firm services trade surplus. We expect CAD/GDP to improve sharply to 1% in FY2024. 4QFY23 CAD supported by lower goods trade deficit and steady services surplus:  CAD in 4QFY23 narrowed to US$1.4 bn (0.2% of GDP) from US$16.8 bn in 3QFY23. This was led by goods trade deficit narrowing to US$53 bn (3QFY23: (-)US$71 bn) with exports at US$116 bn (US$106 bn) and imports at US$168 bn (US$177 bn) due to lower non-oil imports. Services trade surplus was steady at US$39 bn aided by software exports and professional and management c...

Continuing from Tuesday ( Nine years of continuity and low growth ), I must say one key area of sub-optimal by the incumbent NDA-2 government is management of human resources. Despite massive public campaigns, the investment in education, skill developments, and employment generation opportunities have been found lacking. Meager budget allocations have been made for capacity building in the areas of education and skill development. In fact, the capital expenditure budget was sharply cut for school & higher education and skill development in the union budget for FY24. A meager sum of Rs99.2cr was allocated towards capital expenditure on skill development. The successive governments in India have been consistently ignoring the fact that the global community has always valued resource rich nations and expected them to behave in a responsible manner to preserve the global order. ·          The capital rich western world is expected to help the...

Last month the incumbent NDA government completed nine years in power with BJP having full majority in the Lok Sabha on its own. In the 2014 general election, it was after three decades (post the landslide win of the Congress party led by Rajiv Gandhi in 1984) that a single party (BJP) had secured over half the seats in the Lok Sabha. Obviously, the people had great hopes from the new government that has won their confidence on the promises of a corruption free regime with equal opportunities   (Sabka Saath Sabka Vikas). For the 5years (2014-2019) the Indian economy (Real GDP) grew at a CAGR of ~7.4%, slightly better than the CAGR of ~7.1% during the previous five-year term (2009-2014). In 2019, the BJP returned to power with an even larger majority. During the first four years of the current term, the Indian economy has grown at a CAGR of 3.1%, the slowest pace of growth achieved by any government in the post liberalization (1991) era. The best growth trajectory was seen during UP...

Key economic trends (Elara Capital) ·          Deflationary impulses seem entrenched in the global economy. We believe global inflation may surprise on the downside through rest of CY23E. ·          We see the Fed pausing even in July 2023 meet – Expect the first rate cut by the Fed in Dec-23. ·          Historically, equities perform better in a hike cycle than a cut cycle. Bonds are a better bet in run up to rate cut cycle. Gold is the preferred commodity asset through both hike and cut cycles. The USD-INR usually fails to capitalize on the overall EM FX risk on sentiment in the run-up to a rate cut by the Fed. ·          Deflationary producer prices in China suggest weakening growth in G4 – the US, the EU, the UK and Japan. We do not rule out a sub 5% GDP growth in China in 2023E. (base case 5.2%) ·   ...

The benchmark Sensex has recorded its new all-time level today, surpassing its previous high level of 63583 recorded in early December 2022. Nifty50 is also few points from its previous highs. In the past six months, since December 2022, both the indices have taken a huge swing of over 10%. Optically the markets may appear flat for the past six months, as the benchmark indices are almost unchanged; but a deeper dive would indicate that many material shifts have occurred in the market during this period of six months. For example- ·           Nifty50 is almost unchanged for the past six months, Nifty Midcap100 has gained over 9% and Nifty Smallcap100 has gained over 7% in this period. ·           The sectors that led the markets to new highs in the post Covid period, i.e., IT Services, Pharma, Energy and Metals have actually yielded negative returns in the past six months; while the FMCG sector has ...