Please click here for Monthly Equity & Debt Outlook Presentation – September 2020.
· 1Q FY21 Real GDP growth contracted by 23.9% YoY, weaker than the street estimates. Led by a strict lockdown and labor migration, construction was the worst hit, followed by trade, hotels, transport and communication.
· MPC took a pause in the rate easing cycle while refraining from giving any specific forecasts on growth & inflation given heightened uncertainty.
· July’s CPI print of 6.9% (v/s 6.2% in June) drastically reduced chances of a rate cut for the rest of this fiscal year. RBI’s recent policy statement had predicted inflation to stay elevated till Sep and see moderation in 2HFY21.
· India’s trade balance turned to a deficit of ~$4.8bn in July are a rare surplus of ~$0.8bn in June, as gold and other imports started to pick-up. Exports in July were down ~10% in July at $23.6bn while imports at $28.4bn.
· India’s fiscal deficit stood at Rs8.2trn at the end of July, at ~103% of the budgeted target for the current fiscal year. Sharp fall in tax receipts coupled with resilient government expenditure led to the high deficit in the period.
· After an erratic July, August witnessed excess rainfall of 26%, highest print since 1901. Rainfall is already at a record in states of Maharashtra, Madhya Pradesh, Gujarat, and Odisha.
· Indian Equities moved slightly higher (Nifty +2.8%) in August.