The Signal (weekly highlights)

1. Mutual Fund flows

Investors poured in a net Rs 8,666.68 crore in equity mutual fund schemes against previous month’s deposit of Rs 22,583.52 crore. Flexi Cap funds saw the highest inflows at 4741 crores while focused funds saw inflows above Rs. 3000 crores.

Inflows to NFOs have been key drivers towards the equity AUM growth. NFOs across categories mobilized Rs. 23,668 crores in August. Further, SIP collections have been growing at a steady pace indicating positive trends in the industry.

2. PLI Scheme for Textiles

The Union Cabinet has approved the production linked incentive (PLI) scheme for specific segments in the textiles sector. As part of the scheme, incentives worth Rs. 106.8 billion will be provided to industry over five years.It is estimated that the scheme will lead to fresh investment of more than Rs.190 billion and additional production turnover of over Rs.3 trillion in five years. PLI scheme will further give a boost to the exports of Indian textile.

3. Air Traffic improves in the month of August

India’s domestic air traffic registered about 31% sequential growth during August at about 6.6 million passengers, compared to 5 million passengers recorded during in the month of July 2021

The airlines’ capacity deployment for August 2021 was around 99% higher at about 57,500 departures, as against 28,834 departures in August 2020. Air traffic growth has been one of the high frequency indicators used to gauge the economic revival. While International travel still remains curbed, domestic traffic has seen significant growth.

4. Direct Tax Collections see a significant uptick

The central government’s net direct tax collections grew by 95 per cent to Rs.3.7 trillion between 1 April and 2 September 2021 as compared to Rs.1.9 trillion during the same period in the previous fiscal.The tax collections have also been higher by 31% from the pre-pandemic level of 2019 suggesting that the growth has not been only visible on account of a low base effect.

5. State’s Capex growth remains high even on a rising base

State governments’ capital expenditure has remained robust in the first four months of the current financial year even as the advantage of low base has begun to peter out.

The 14 major states reported a combined capex of Rs. 76616 crores in Apr-Jul 22 up 110% YoY. The high capex has been on the back of Government’s effort to bring back the economy in the momentum. Government capex is the most efficient way to get the wheel rolling.