The Signal: The Week Highlights

1. India’s PMI Number Resorts To Manufacturing Its Own Health

India’s manufacturing may be back on track, rising to 58.9 – highest in >10 years. Output, New Orders, and Exports grew at fastest pace in last 12,12 and 6 years respectively. News of Unlocking 5.0 and Relief Package 2.0, pushed business confidence to its highest levels since August 2016. 

As Covid 19 continues to press pain, Indian industries look to manufacturing a pain suppressant. After 5 months of toil, manufacturing finally leaps into expansionary mode, with business confidence following suit. Next month and after may tell a different story, but as open 4.0 happens, Manufacturing Sector is gearing up for opening 5.0. 

2. The GST Brand Goes Grand

GST collections in October at Rs 1,05,155 Cr. Is 10% higher than year-ago period. It previously crossed Rs 1 lakh cr in Feb 2020 at 1,05,366 cr. Growth in GST vs last 3 months at -14%, -8% and +5 % shows the trajectory of recovery of economy and, correspondingly, of revenue collections. 

Unlocking 4.0 culminated a string of positives as traction in high growth indicators has spilled over into higher GSTs. The ambitious GST collections can augur higher state expenses on infra and other key segments while also reducing the impact of deficit on short-&-Long term state finances.

3. Covid Cuts A Slice Of The Mutual Fund Pie

MFs sell for 5th straight month, dumping Rs 14,344 Cr. In equities. This is highest single-month withdrawal since March 2016 when they dumped Rs.10,198 Cr. With CY20 net flow brought down to Rs2,671 Cr, MFs can turn net sellers like last seen in CY13 when they sold Rs.21,082 Cr

Be Greedy when others are fearful” is a half-quote with a full impact. The $1.9 Tn market of a $5 Tn to-be economy has a mix of doubters (domestic equity selling) and believers (Net FII buying – 4 months now!). As the economy recovered 50% from March lows, basic math tells us there is still a 50% gap (read as: offering), for those willing to risk it. The choice is yours; the time is not. Thick Quick – Act Quicker.

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

Adoption to ‘Now Normal’ and robust quarterly results welcomed positive sentiment by FPIs who directed their surplus liquidity to Indian bourses. US elections, Vaccine availability and India’s increased wt. in MSCI index also contributed to FPI turning from net sellers last month to buyers today. 

The rage of Virus and Volatilities in international markets coupled with India’s 2020 tactics to tackle 2020 issues, is bearing fruit as FIIs acknowledge India’s growth trajectory. Our shift from Covid-19 to Go-vid 21, has cash sailing across ponds signaling the rejuvenation of their belief in India today and its economic aspirations in the years to come.

5. RBI Actions Bode Well For Institutions and Individuals

RBI to conduct OMO worth Rs.20,000 Cr to support market sentiment and assure adequate liquidity. Doubling scale of OMO from earlier Rs.10,000 Cr, RBI has conducted Rs.66,305 Cr worth OMO so far. It also announced operation twist amounting to Rs.10,000 Cr to be conducted in next week. 

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”.