The Signal (weekly highlights)

1. Monthly equity inflows continue the positive trend

Inflows into equity mutual funds rose to Rs 11,615 crore in November. The inflows can be attributed to the slight correction in the market recently. Equity mutual funds have been witnessing inflows since March this year on the back of a strong rally in the market

The number of SIP accounts rose to 4.78 crore as on November 30 from 4.64 crore on October 31, while the monthly SIP contribution breached the Rs 11,000-mark for the first time ever, ending at Rs 11,004.94 crore.

2. RBI holds rates, says recovery needs support

Reserve Bank of India on Wednesday continued to bat for growth, leaving key policy rates unchanged and retaining its accommodative stance.

The central bank is of the view that the economy, while regaining momentum needs support so that the recovery is sustainable and broad based. The aggregate demand is still weak and will need private investment to boost the demand.

3. Fitch Ratings cut India’s FY22 economic growth forecast to 8.4%

Fitch Ratings cut India’s economic growth forecast to 8.4 per cent, from the previous 8.7 per cent for the current fiscal year (2021-22, or FY22)

 Risks to recovery remain, especially in the near term, given that less than one-third of the population is fully vaccinated. The newly discovered Omicron variant has added to the risk

4. E-way bill generation drops to lowest in 5 months in November

The daily e-way generation was 20.38 lakh in November, down 14% on month compared with 23.71 lakh in October. Number of e-way bills for inter-state commerce under the goods and services tax (GST) system came in at 6.12 crore for November, the lowest in five months, reflecting moderation in goods dispatches post-festivities.

However, the daily e-way bill generation at 21.1 lakh in the first five days of December indicate possibility of demand pick up ahead of year-end vacations.

5. States maintain healthy capex pace

Improved revenues have enabled states to keep a healthy pace of capital expenditure in the first eight months of the current financial year, Data gathered of16 states showed their combined capex stood at Rs 1.5 lakh crore in April-October of FY22, up 70% on year and 13% over the level in the comparable immediate pre-pandemic period.

The growth in states’ capex was also aided by a conducive base (34% decline in the corresponding period of FY21). Improved revenue flows have also allowed the states to prune borrowings. Borrowings by the 16 states rose just 8% on year to about Rs 3.1 lakh crore in the April-October 2021 period, compared with 57% rise witnessed in the (Covid affected) year-ago period.