Do it yourself

3QFY23 GDP: Slowdown in private consumption alarming (MOFSL) Real GDP expanded by 4.4% YoY in 3QFY23: Real GDP/GVA grew 4.4%/4.6% YoY in 3QFY23 (v/s our forecasts of 4.5%/4.1% and the Bloomberg consensus of 4.7%/4.6%). It implies that real GDP/GVA rose 7.7%/7.2% in 9MFY23. Importantly, there were upward revisions in FY21/FY22 growth to -5.8%/9.1% from -6.6%/8.7% earlier. The CSO expects 5.1% YoY growth in 4QFY23, which means full-year growth of 7% in FY23. Anything between 4.7% and 4.9% in 4QFY23 implies 6.9% growth in FY23 and 4.6% or below implies 6.8%. We believe that real GDP growth could be ~4.5% in 4QFY23, implying full-year growth of 6.8% in FY23. We maintain our forecast of 5.2% growth in FY24, led by weak consumption and some moderation in investments. Consumption growth collapsed, though investments grew decently: Details suggest that total consumption growth weakened to just 1.7% YoY in 3QFY23, dragged down by much weaker-than-expected growth of 2.1% YoY in PFCE and ...

  Indubitably, broader economic growth - involving improvement in physical infrastructure, favorable macroeconomic indicators, stronger geopolitical positioning, greater global acceptability etc., is most desirable for a developing economy like India. However, the importance of improvement in social indicators, quality of life and sustainability cannot be disregarded as less important. In fact, if someone asks me to choose between a more equitable, just and sustainable society and a rich but unequal and unjust society pursuing an unsustainable path of development, I would definitely choose the former over the latter, without giving it a second thought. India has seen consistent improvement in many social, quality of life and sustainability parameters in the past three decades particularly. All the governments have focused on improvement in factors like literacy, infant mortality, primary education, gender equality, poverty alleviation, regional equality etc. Several mission level...

  Five months ago, I had highlighted the likelihood of a trading opportunity emerging in gold. ( see here ) The opportunity did present itself, though not exactly in the manner I had anticipated. Nonetheless, the gold prices rallied about 19% in USD terms; from a low of USD1630/oz in early November to a high of USD1950/oz in early February. Since peaking out in early February, the gold prices have corrected about 7% in USD terms. It would therefore be pertinent to ask what traders and investors should be doing with their gold positions. It has been my long standing view that gold is no longer an investment asset. (for example see  here  and  here ) The view is even strengthening with each passing year. I believe that it is highly unlikely that gold will stage a comeback as a widely accepted medium of exchange (gold standard); and it will be gradually phased out as a store of value as better digital options emerge. In this context, the latest report of the World Gold ...

The recent move in prices of some popular e-commerce stocks listed in India has caught the eye of the market participants. These stocks have sharply outperformed the benchmark Nifty50, Nifty IT and even NASDAQ in the past one month. Notably, these stocks have been sharply underperforming the markets for the past one year particularly. Most of these stocks have lost about two third of value from their respective all time high stock price levels. Many investors who had bought these stocks in the 2021-2022 frenzy have seen material erosion in their investment value. It is therefore pertinent to examine, from the individual investors’ viewpoint, whether the tide is turning for these companies; to assess whether they should stay invested, buy more or consider using the latest price rally to exit their positions. Use your own parameters One grave mistake small investors usually make while investing in the stock of a company, is to use the valuation matrices followed by specialized invest...

FY24 Economic Outlook (India Ratings) India Ratings and Research (Ind-Ra) expects GDP to grow 5.9% yoy in FY24. Although National Statistical Organisation’s (NSO) first advanced estimate (AE) of FY23 GDP is 7.0%, it does not expect the growth momentum witnessed in 1HFY23 to sustain in 2HFY23. NSO estimates GDP growth to drop to 4.5% in 2HFY23 from 9.7% in 1HFY23. The pent-up demand which had provided thrust to the growth is normalising, exports which had been buoyant are facing headwinds from the global growth slowdown and credit growth is facing tighter financial conditions. The International Monetary Fund expects the global GDP growth to fall to 2.9% in 2023 from an estimated 3.4% in 2022. Ind-Ra expects PFCE to grow 6.7% yoy in FY24 (FY23: 7.7%). Yet, it may not lead to a broad-based consumption demand recovery, because the current consumption demand is highly skewed in favour of the goods and services consumed largely by the households belonging to the upper income bracket. The...

Continuing from yesterday   ( The great Indian carnival ) With the presentation of the union budget earlier this month, the incumbent government has entered the final phase of preparations for the 2024 general elections. The preparations would be tested in several state assembly elections to be held prior to the general elections. Amongst these Karnataka, Madhya Pradesh and Rajasthan shall be keen contests. As per most of the recent surveys, the ruling National Democratic Alliance (NDA) led by Prime Minister Narendra Modi, is likely to return to power for a third successive term in 2024. The alliance is mostly riding on the popularity of PM Modi for its electoral success. Of course the lack of a strong national alternative is also working in favour of the incumbent government, to some extent. It is therefore pertinent to examine what PM Modi has done right to maintain its popularity for the past nine years. I would not like to delve into the role of the political strategy of BJP in...

Festivals are quintessential to the idea of India. No one can imagine India excluding the hundreds of festivals we celebrate. There is hardly any day on the calendar that is not marked with a religious observance or a social celebration. As a community we are so addicted to festivities that we even celebrate sporting events as festivals. Not surprising, political events like elections, local level political appointments, conventions of political parties, etc. are also celebrated as major festivals in India. The largest festival in the world, Indian general election, is scheduled to be held in about one year from now. All political parties, like the troops participating in the annual carnival in Brazil, have already started preparing for the quinquennial event. The potential 950million voters are also looking forward to it; though one third of them may actually not bother to exercise their franchise. In most major democracies in the world, the incumbent leadership and/or party seeks ree...

The Reserve Bank of India has increased the policy repo rate six times in the current financial year (FY23). It has continued to withdraw excess liquidity from the financial system through various means and has mostly maintained a hawkish demeanor, insofar as the policy outlook is concerned. In spite of (i) aggressive rate hikes; (ii) withdrawal of excess liquidity from the system; (iii) sharp correction in global commodity prices (especially energy); (iv) restoration of supply chains that had got damaged during pandemic resulting in severe supply shortage of key raw materials and inputs; (vi) three consecutive normal monsoon seasons yielding bumper crops; and (vi) slow growth – CPI inflation has persisted above the RBI tolerance range of 4 to 6% and credit growth has accelerated and remained strong. Obviously there is a disconnect somewhere. Even one third of the members of the Monetary Policy Committee of the RBI do not agree with the policy stance of the RBI and have voted against...