by admin | May 25, 2021 | Economy, Markets, News
Mumbai : Taking a cue from global markets and cautious approach ahead of futures and options (F&O) expiry as well as the second quarter GDP data announcement, the key Indian equity market indices on Thursday opened lower.
The Sensitive Index (Sensex) of the BSE, which had closed at 33,602.76 points on Wednesday, opened lower at 33,542.50 points.
Minutes into trading, it was quoting at 33,501.64 points, down by 101.12 points, or 0.30 per cent.
At the National Stock Exchange (NSE), the broader 51-scrip Nifty, which had closed at 10,361.30 points, was quoting at 10,332.70 points, down by 28.60 points or 0.28 per cent.
The benchmark indices, which traded in the green during most part of the day, had closed marginally in the red on Wednesday as investors booked profits in banking and metal stocks.
However, losses were trimmed by healthy buying in consumer durables, capital goods and healthcare stocks.
The Sensex was down by 15.83 points or 0.05 per cent at the Wednesday’s closing. In the day’s trade, the barometer 30-scrip sensitive index had touched a high of 33,728.81 points and a low of 33,553.12 points.
The Nifty too, was down by 8.95 points or 0.09 per cent.
On Thursday, Asian indices were mostly showing a negative trend. Japan’s Nikkei 225 was trading in red, down by 0.13 per cent, Hang Seng down by 1.31 per cent while South Korea’s Kospi was down by 0.64 per cent.
China’s Shanghai Composite index was quoting in red, down by 0.27 per cent.
Nasdaq closed in red, down by 1.29 per cent while FTSE 100 was also down by 0.91 per cent at the closing on Wednesday.
—IANS
by admin | May 25, 2021 | Economy, Markets, News
By Porisma P. Gogoi,
Mumbai : GDP data for the second quarter of the 2017-18 fiscal, along with expiry of derivatives and the movement of foreign funds, are expected to be the main indicators to give direction to the key Indian equity indices in the upcoming week.
Apart from global cues, over the coming weeks, markets will seek direction from future events like the Reserve Bank of India policy meet during the first week of December and the Gujarat elections the following week.
“Focus in the coming week will be on the GDP numbers for the September quarter due to be released on November 30. Consumption growth is likely to be impacted by GST implementation during Q2FY18 and private sector capex continued to remain weak,” Teena Virmani, Vice President – PCG Research at Kotak Securities, told IANS.
“RBI policy in the first week of December and Gujarat elections in the second week are also being eyed closely. The rise in crude prices has left very little scope for RBI to cut rates in the upcoming meeting,” said Virmani.
Virmani pointed out that at the global level, the movement of oil prices will be closely watched as geo-political tensions in the Middle East are likely to remain supportive of oil prices in the run-up to the November OPEC (Organisation of the Petroleum Exporting Countries) meeting.
Other analysts have noted the November derivatives’ expiry and the direction of the flow of funds as the major triggers for the week starting November 27.
D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, said: “The Indian markets may remain volatile as investors churn portfolios ahead of the monthly derivatives contract expiry on Thursday.”
“Also, the flow movement of foreign funds and domestic funds will play a critical role in giving direction to the market,” Aggarwal told IANS.
Provisional figures from the stock exchanges showed that domestic institutional investors (DIIs) bought scrips worth Rs 2,925.56 crore during last week. However, foreign institutional investors (FIIs) continued to remain net sellers, shedding stocks worth Rs 1,870.27 crore.
Figures from the National Securities Depository Ltd. (NSDL) revealed that foreign portfolio investors (FPIs) invested in equities worth Rs 2,106.45 crore, or $325.16 million, during November 20-24.
“Technically, with the Nifty rallying after two weeks of losses and also breaking out of the recent narrow trading range, the bulls seem to be in control. Further upsides are likely once the immediate resistance of 10462 is taken out,” Deepak Jasani, Head of Retail Research for HDFC Securities, told IANS.
Last week, the equity indices rode the bulls pursuing the optimism on a sovereign ratings upgrade of the Indian government’s bonds by US credit rating agency Moody’s a week before, supported by a further thrust given by continued buying by DIIs.
On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) closed higher from its previous week’s close by 336.44 points, or one per cent, at 33,679.24 points.
The broader Nifty50 of the National Stock Exchange (NSE) edged higher by 106.1 points, or 1.03 per cent, to close the week’s trade at 10,389.70 points.
(Porisma P. Gogoi can be contacted at porisma.g@ians.in)
—IANS
by admin | May 25, 2021 | Economy, News, Opinions
By Amit Kapoor & Chirag Yadav,
Political conversations across the country in the last few weeks have been heavily focussed on the country’s recent economic under-performance. Economic growth has been consistently falling over the last six quarters amidst dipping investment sentiments with no respite in sight.
Credit rating agencies have lowered India’s growth predictions and the government seems to be grasping at straws to reverse the growth trends. However, since gross domestic product (GDP) is such a concise term and quite easily understandable, in its obsession, we lose sight of the fact that there are other equally crucial elements of development within a nation.
Expansion of individual capabilities needs to be the ultimate goal of development. These capabilities, which are not always economic, encapsulate aspects such as improvement of basic human needs like shelter and basic medical care; foundations of well-being like access to basic knowledge and healthy environment; along with equitable provision of opportunities like personal freedom and choice. Economic growth is merely a narrow way of quantifying development and mostly a means to achieve the capabilities outlined above.
Therefore, there needs to be an indicator that is broader than the GDP for a better development vocabulary of the nation; a number that combines the simplicity of GDP and the complexity of reality. Also, unlike the Human Development Index (HDI), it needs to isolate the effect of economic change to better understand the relationship of social progress with economic one. With this aim in mind, the Institute for Competitiveness has expanded the use of the Social Progress Index (SPI), which is annually measured on a global level, to the level of Indian states.
Social Progress Index: States of India present a decadal progress of Indian states on social parameters despite their varied economic standings by using a combination of 54 indicators to obtain that one simplistic figure. The analysis brings out some interesting insights. The first major finding comes from the relationship between economic and social progress. It might seem intuitive that economic progress begets social advancement. As people earn more money, they obtain higher capability to purchase social goods.
However, our findings poke some holes into this intuitive logic. First, economic performance cannot fully explain social progress among states. To be precise, per capita income can explain only about 50 per cent of the SPI scores. This is seen in instances like that of Chhattisgarh, which has attained a higher SPI score than Rajasthan despite having lower per capita income levels. Second, even though the relationship between the two is positive and significant, it not exactly linear. We found that at lower levels of income, a small change in per capita income levels can lead to higher incremental changes in SPI scores compared to that at higher income levels.
The second major finding of the Index is that Indian states are better at provision of basic human needs rather than opportunities to their citizens. Therefore, creation of a society where opportunities are distributed more or less equally still remains an elusive dream. On a positive note, however, the score for opportunities has displayed the highest increase in the last decade followed by the other two pillars of SPI, basic human needs and foundations of well-being.
Finally, the third significant finding from the Index is that the greatest improvement in social progress within states has been in areas which are highly correlated with economic progress. On the contrary, areas with weak correlations to economic progress have seen a decline in performance or stagnation. This is clearly due to the disproportionate policy focus on economic parameters that we are currently noticing as well. Such a trend indicates that it is necessary for states to directly focus on social advancement alongside economic progress. A lopsided focus on economic parameters will result in the same lopsided outcomes.
The Index further carries detailed state-specific observations, which can be quite helpful for state-specific policy making. All of these findings from it underline the fallacy of obsessing over economic numbers and believing that social progress will automatically follow. On the contrary, social progress needs to be stimulated and that too not with a generic approach. An all-encompassing national policy cannot be effective since each state has a unique social deficiency. There is an urgent need among Indian states to dynamically track social parameters and act upon the ones in which they are lagging behind.
Finally, it should be pointed out that the Index is not an end in itself. It is only aimed to highlight key challenges across Indian states and to inculcate a spirit of competition among them to improve their social outcomes. The Index hopes to start a conversation around the existing social problems within Indian states, but the approach that they need to adopt is a matter of further public discussion and debate.
(Amit Kapoor is chair, Institute for Competitiveness. He can be contacted atamit.kapoor@competitiveness.in. Chirag Yadav is senior researcher at Institute for Competitiveness, India)
—IANS
by admin | May 25, 2021 | Banking, Corporate, Corporate finance, Corporate Reports, Economy, Finance, Markets, News, Politics
(Note Ban Series)
By Aparajita Gupta,
New Delhi : Almost a year down the line, is Prime Minister Narendra Modi’s dream of making India a cash-less or less-cash country becoming a reality?
Industry stakeholders feel that though the note-ban drive by the government gave the necessary impetus to citizens to start adopting online payment platforms, a lot needs to be done by both the government and the industry to make it a success.
The adoption rate of online platforms was high during the demonetisation period, but it plateaued out as soon as cash became available in the system.
When the the Modi government banned high denomination notes of Rs 500 and Rs 1,000 notes on November 8 last year, removing an overwhelming amount of cash from the economy, people had to willy-nilly fall back on plastic or online transactions.
“The fact that 86 per cent of the cash available in the system was sucked out overnight gave an immediate boost to online/mobile payment platforms. There was a push-up factor,” Vishwas Patel, co-chair, Payments Council of India (PCI) and founder and CEO of CC Avenues, told IANS.
But once cash was back in circulation, those who earlier dealt mostly in cash went back to doing so, he said.
The PCI was formed under the aegis of Internet and Mobile Association of India in 2013 to cater to the needs of the digital payment industry.
He said during November, December 2016 and January 2017, online transactions were at their peak. In October 2016, debit card transactions stood at Rs 21,941 crore and those of credit cards at Rs 29,942 crore. Post-demonetisation, in December 2016, debit card transactions jumped to Rs 58,000 crore and those of credit card were at Rs 31,150 crore.
However, in August 2017, 10 months after the note ban, debit and credit card transaction stood at Rs 36,000 crore each, having come down substantially from the heights they achieved, but not falling back to the pre-demonetisation lows.
Patel said that after the cash flow in the system eased, small kirana shops stopped transacting through online payment channels, primarily because they did not want to take a tax number or a Goods and Services Tax number. “They do not have the wherewithal to pay taxes,” he said, adding that the “government needs to incentivise merchants, otherwise small and medium enterprises are going to go back to cash mode.”
Patel said security and trust in payment systems was something all stakeholders need to work on together. “As an industry body, we are preparing a National Negative Database of consumers and merchants so that we can reduce fraud and build trust in the eyes of consumers,” he added.
The database details would be circulated amongst payment gateway service providers, banks and card companies. “We are also working on a trust certificate that can be displayed by all merchants on their websites,” Patel added.
Vineet Singh, Chief Business Officer at Mobikwik, a payment app, said demonetisation had became a force multiplier. “It has pushed India a decade ahead towards the agenda of adopting online payment platforms. Naturally, things cooled down a bit post-demonetisation,” Singh told IANS.
Mobikwik had 3-3.5 crore users in the pre-demonetisation days and a year after note ban it has 6.5 crore. The company also witnessed a sharp rise in transactions from one million to three million within a year.
“Online payment companies in the last one year have increased their base significantly. They are experiencing healthy month-on-month growth and the adoption of online payment platforms was across all age groups,” Singh said, adding that “now everybody takes online payment seriously, which will provide a secular road towards a cash-less society.”
Vivek Belgavi, Leader, Fintech at PricewaterhouseCoopers, too said that, after cash returned to the system, people started transacting more in notes, but there was an uptick in digital transactions.
“Digital transactions have grown. But the key thing is that a lot of stepping stones for future adoption have been laid down — like the BHIM (Bharat Interface for Money) app by the government. Demonetisation was the shock that forced people to move to online channels,” he said.
Belgavi said the government should give more importance to low-cost infrastructure like availability of point-of-sales machines. “Industry should offer citizens the whole ecosystem of digital transactions. They should be offered an experience that is better than cash transactions,” he added.
Dewang Neralla, MD and CEO, Atom Technologies, told IANS their online payment processing volumes had grown three times since demonetisation.
“By March 2017, our transactions had doubled and with almost 11 months gone by we still see a healthy growth of around 20 per cent on a month-on-month basis. Today we process payments of about Rs 6,800 crore per month across more than 100,000 merchants. We expect this figure to grow at least three times in the next three years.”
Online transactions are bound to grow over a period of time, but in a country which overwhelmingly ran on cash, it may be difficult to do a quick digitisation.
(Aparajita Gupta can be contacted at aparajita.g@ians.in)
(Editors: The above article is part of a series of demonetisation stories leading up to November 8, the day note ban was imposed last year)
—IANS
by admin | May 25, 2021 | Banking, Corporate, Corporate finance, Corporate Governance, Corporate Reports, Economy, Finance, News, Politics
(Note Ban Series)
By Biswajit Choudhury,
New Delhi : While the immediate impact of demonetisation was seen in the long queues outside ATMs and felt through acute cash shortage, its anniversary is an appropriate vantage point to assess the less visible and generalised effect on the economy of what was easily the most disruptive measure post-Independence.
The difficulty in making a cost-benefit analysis is that the move was not purely economic, given the fact that the currency issuer Reserve Bank of India (RBI) had no role in the decision, as testified by former Governor Raghuram Rajan.
So demonetisation comes across more as a measure of political economy with the declared objective of curbing black money and countering counterfeiting and terror finance, and which appeared to have paid political dividend to Prime Minister Narendra Modi in the Uttar Pradesh elections this year.
Starting with the official figures, at the end of May, the Central Statistics Office announced that GDP during the fourth quarter, ending March this year, fell sharply to 6.1 per cent from seven per cent in the previous quarter, while growth for the year as a whole was also expected to decline correspondingly. India’s GDP during the past fiscal grew at 7.1 per cent, at a rate lower than the 8 per cent achieved in 2015-16.
In terms of gross value added (GVA), which excludes taxes but includes subsidies, the growth came in even lower at 5.6 percent over the GVA for 2015-16.
Chief Statistician T.C.A. Anant sought to downplay the impact of the note ban, saying he “would caution against reading a single number that comes out after an event as being reflective of consequences of the event”. At the time of releasing the previous quarter’s GDP, he had said that this was based on figures on industrial production and only on the advance filings of corporates.
The numbers, therefore, had not factored in the informal economy, which accounts for an estimated 45-50 per cent of output in the Indian economy and employs around 85 per cent of the country’s workforce. More importantly, this sector transacts entirely in cash and was the hardest hit by demonetisation, which withdrew 86 per cent of currency from circulation.
Former Chief Statistician Pronab Sen had said in March that once the informal sector numbers came in, the growth rate could go below 6.5 per cent, which turned out to be close to the actual figure.
At the same time, both the RBI and the International Monetary Fund (IMF) lowered India’s growth estimates for 2016-17 by up to 1 percent, citing the impact of demonetisation.
This was not too far from former Prime Minister Manmohan Singh’s prediction that the economy would be hit by around two per cent because of the note ban.
Rating agency ICRA said in a note earlier this year that “since the early estimates of quarterly GVA rely heavily on available data from the formal sector, which is expected to have weathered the note ban better than the informal sector, the third quarter (October-December) projected GVA growth of 6.6 per cent may not fully capture the impact of the note ban”.
In October, the IMF said in its latest World Economic Outlook that India’s economic growth for 2017 and 2018 will be slower than earlier projections. The report cited “lingering impact” of demonetisation and the goods and services tax (GST) for the expected slowdown during the current and the next year. The IMF projected India to grow at 6.7 per cent in 2017 and 7.4 per cent in 2018, which are 0.5 and 0.3 percentage points less than the projections earlier this year, respectively.
The World Bank too forecast that India’s GDP may slow from 8.6 per cent in 2015 to 7.0 per cent in 2017 because of disruptions by demonetisation and the GST.
Former RBI Governor Raghuram Rajan, who, on being asked by Modi for his informal opinion, had said the costs of such a measure would outweigh any long-term benefits, while there were less costly alternatives to achieve the stated goals of demonetisation.
“On the short-term costs of such a measure, monetary economists would say that you’d see an immediate impact on activity. People who used currency, things would shut down for them… there would be an unrecoverable effect on economic activity,” Rajan said here at the launch of his book “I Do What I Do”.
Citing the cost analysis by metrics of demonetisation done by JP Morgan, Rajan said the GDP took a hit of around 1.5 per cent, which translates to a sum of Rs 200,000 crore.
“On the benefit side you have Rs 10,000 crore coming in, but you need a lot more taxes than that to really benefit,” he said.
Coming back to the beginning, this is what Nobel winning economist Amartya Sen had to say of demonetisation: “It is a despotic action that has struck at the root of the economy based on trust. It undermines notes, it undermines bank accounts, it undermines the entire economy of trust. That is the essence in which it is despotic.”
With demonetisation also designed to enlarge the tax base, an ex-IRS official’s perspective on Modi’s likely motive is provided by former Director of Revenue Intelligence B.V. Kumar, who writes in his book, “Underground Economy”: “One reason could be that Modi has completed half his term and not a single initiative during his term has shown results which can be termed as ‘spectacular’ and ‘vote spinners’.”
Demonetisation, after one year, does not look as rosy as it was painted out to be by the image spinners in the government.
(Biswajit Choudhury can be reached at biswajit.c@ians.in)
(Editors: The above article is the second in the series of demonetisation stories leading up to November 8, the day note ban was imposed last year).
—IANS
