The Signal: The Week Highlights

1. Here’s What The PMI Print Has In Store For The Health & Wealth Of Economy

Manufacturing: India Manufacturing PMI hit a 3-month low in November coming in at 56.3. It recorded the highest figures in 12 years at 58.9 in October 2020. The 3 verticals of manufacturing industry recorded expansion, with growth led by consumer goods, which was the only sector to see a stronger rate of increase    

Services: Services PMI fell to 53.4 in Nov’2020 from 54.1 in October 2020. Reading maintained a growth trajectory for 2nd month in a row. Recovery reflects upturn in business activity growth and the 1st rise in employment in 9 months. Positive sentiments climbed to highest levels since February

Consecutive growth in PMI indicates economy’s sustained momentum on its path to recovery. Unlocking 4.0 is yielding positive results by aiding in expedited stabilization of demand and supply dynamics post the coronavirus-triggered lockdown. Key risks continue to be coivd virus & steep inflation. 

2. RBI Backs Its Bark With Big Bites

RBI keeps interest rates unchanged at 4.00%, maintaining an accommodative stance. Reverse Repo also held at 3.35%. In talking about further cuts, MPC noted constraints in place derived by inflation. Inflation outlook shows stress, courtesy of supply-side bottlenecks. MPC affirmed India’s technical recession but said strength in economic indicators carry upside risks to growth. Real GDP growth to come in at -7.5% in 2020-21.

RBI has been at the forefront in tackling the virus and teasing and testing the economy. As Covid breaks the long-standing economic shackles, so does RBI, by adopting a foot-loose approach. In bidding adieu to the old, RBI has donned a 2020 Meme, “Modern times require modern solutions”.

3. The Perks Of Potential – FDI’s Favor The Fevered India

Foreign flows have found favoritism in India, with India being only country to receive positive FII flows across all time horizons. When looking the inflow/outflow ratio circa FY2020, India leads the pack at 72% FII flows, thus outperforming the 2nd by ~2.5x multiple. When charting the H1FY21/H1FY20 FII flows, India again tops the ranks by registering a ~650% growth, thus outperforming the 2nd by ~5.5x multiple.

Amidst a corona-filled year, distraught with lockdowns and recessionary fears, India got clout when world was in doubt. The increased investor-friendliness coupled with Investment potential of India has helped it record 55%+ growth between 2008-2014 and 2014-2020. With the world buying into India, the real question arises – Are you?

4. Economy Shows Excitement As It Expedites Excellence

The virality of the virus’ has finally met its match in economy unlocking and ‘Aatmanirbhar Bharat’ package as green-shoots of economy emerge turn from roots to shoots. The rise in GST, PMI, export sales and business confidence figures are a sign of us coming to terms with ‘New-Normal’.

India reinstates its position as the apple of the (investor) eyes, by doctoring itself out of current cry-sis. Govt.’s marquee policies and packages, in support with RBI’s financially prudent intervention has India kick-start its economy in the higher gears. When peers are entering lock-downs, India looks to lock-in monies across borders, ready to become the fastest growing economy in the coming times.

5. G20 Meet & Greet Gives India A Positive Report Card

Economic Multilateralism and National Capacity Building will help nations recover from covid disruptions. Export and Demography prowess coupled with like-minded policies and practices can make India the hotspot for investments the world-over, thus kick-starting a global recovery from home. 

Coming out of trouble bubble has boosted India’s efforts to become the supreme everything-maker as much as it has set back its abilities to do so. In expedition of New Normal, the country is quick to adapting and improvising on current challenges to make them future opportunities for growth.