Jefferies Archives

Indian economic activity rebounded in July: Jefferies

by admin | May 25, 2021 | Economy, Investing, Markets, News

New Delhi : Indian economic activity rebounded in July after the implementation of the pan-India Goods and Services Tax (GST), following a moderation in growth in the previous month, American investment banker Jefferies said on Tuesday.

“Economic activity saw a sharp rebound in July, post the GST-led moderation in June, with our Activity Index growth improving to best levels in 9 months led by consumption indicators,” Jefferies said in a report titled “Growth rebounds from GST lows”.

“The improvement was led largely by rebound in consumption indicators and railway freight,” it said.

“The momentum indicator, though, remained in neutral zone as trends in freight and industry data are mixed and foreign trade growth has moderated,” it added.

Jefferies said the key positive in July was the sharp acceleration in auto sales and uptick in electricity consumption and railway traffic.

The key negatives were the moderation in foreign trade and consequently port traffic and the weak credit growth, it added.

Weak credit growth and low private investment has been an ongoing problem in India for some time now.

A joint study study by Assocham and rating agency Crisil released on Tuesday said weak investments challenge sustainable growth and private investments are unlikely to pick up before 2019 owing to low capacity utilisation and weak balance sheets.

Corporate India is currently heavily overleveraged as a result of flush of investments made in the boom period preceeding the global economic slowdown caused by the US financial crisis of 2008-09. The loans taken by the private sector account for a substantial part of the massive accumulated non-performing assets (NPAs), or bad loans, of state-run banks in India.

—IANS

India’s petroleum consumption growth at record high

by admin | May 25, 2021 | Business

New Delhi (IANS) Strong urban consumption sentiment, reversal of dieselization and lower prices are likely to have caused India’s petroleum products consumption growth to touch a record high during last fiscal, American investment banker Jefferies said on Wednesday.

Total petroleum product consumption growth as reported by the government’s Petroleum Planning and Analysis Cell (PPAC) was at a multi-year high of 10.9 percent in 2015-16, compared to an average growth of 5 percent and a previous high of 7 percent in both 2007 and 2008.

“Strong urban consumption sentiment, reversal of dieselization and lower price are likely to have been factors for strong petrol consumption as it is almost entirely used for personal transportation in two-wheelers and cars,” Jefferies said in a research note.

It said that while diesel growth for the full year was in line with the 10-year median, its growth rate of 9.5 percent in the second half of last fiscal was well above the historical trend.

“Based on our discussion with PPAC, higher demand for both transportation and static equipment for infrastructure projects, poor rainfall leading to higher pump usage and growth of e-commerce leading to retailing of goods movement have been factors contributing to higher diesel consumption, particularly in the fiscal’s second half,” Jefferies said.

“Low crude price has led to higher demand growth of 2.2 percent globally versus the historical average of 1.3 percent, and is likely to have been a factor in India as well,” it added.