Expert Analysis of the Global Macro Events & News affecting the Indian Markets
WEEKLY SYNOPSIS
| Index | 1 Week | 1 Month | 1 Year | 5 Years |
| Nifty 50 | 0.69% | -0.24% | 10.66% | 68.68% |
| BSE Midcap | 1.74% | 5.37% | 24.93% | 93.6% |
| S&P 500 | 1.85% | -0.06% | 15.55% | 57.25% |
| Nasdaq | 2.88% | 0.54% | 28.97% | 108.48% |
The Golden Bird Has Gotten Its Wings Back
India, the fastest growing economy is indeed growing at a surprising rate. We have gone from fifth largest last year to the largest growing economy now. The country recently reported the macroeconomic numbers and parameters for the first quarter of FY24 and we have defied all global trends. While major global economies like the US and China are fighting extreme economic conditions, India is flying high. This week I am talking about our beloved golden bird.
Here’s a quick glance at some important figures reported.
| Nominal GDP growth rate | 7.8% |
| Service sector growth rate | 10.9% |
| Manufacturing growth rate | 4.7% |
| Agriculture growth rate | 3.5% |
| Consumer spending growth rate | 6% |
| Investment spending growth rate | 7.8% |
| CPI General Index | 4.6% |
As you see, great numbers have been reported. At a time when most global economies are struggling to keep a growth rate of merely 1-3%, our nation is growing at the rate of 8%. While we have indeed been growing rather aggressively, one important thing to be noted is the base effect. During the first quarter of FY21, Covid-19 gave a stroke to economies and GDP growth dropped to double digit lows. So, any growth post that is calculated on the negative base, thus it is higher. Growth during the later quarters is slower but more sustainable as opposed to the first. But I am not discounting India’s augmented growth, we are of course doing immensely well.
The Flag-bearers
India has gone from being an agriculture driven economy to a service based economy. Back in the 90s, we would see the primary and secondary sectors being the major contributors to the GDP and economy while we talked about the exponential scope of growth in the service sector. Now, we are finally seeing that growth materialise as numbers with the service sector growing at a good 10.9%. Agriculture too, despite unfavourable climate conditions has grown.
GDP and economic growth are driven by the consumers. The fantastic numbers this quarter are here for the same reason. Despite global tension, Indian consumers are only increasing their spendings and investments driving growth of the country. Going forward too this year, the Indian economy will be driven largely by domestic demand.
The Grim indicators
Global cues may have not affected us too much, but if the conditions were better, we’d have seen entirely different numbers. Goods and services exports dropped mulifolds owing to recession in the US and increased inflation across the globe. At the same time though, imports also fell down. Despite this, manufacturing did not grow. Double digit growth was expected in the sector but instead, what we see is a 1.4% decrease. Given the increased consumer spending, we should have seen improvement in manufacturing but the sector has disappointed.
Unlike most economies, India is recovering from Covid-19 and its blow to the economy. We did see food inflation breaking all highs but the central bank is taking steps to control it. The effect of increased inflation and monsoon will be seen in the coming quarters. Despite the occasional hiccups and base effect, a growth rate of 7.8% is fantastic. The Indian economy is indeed booming!
The Royal family of India
The Ambanis are no less than the royal family of India, much more of a bigger deal than the royals in fact. The Reliance conglomerate is their way through the world and usually, any news around the company directly impacts our markets because of Reliance’s large share in the indices.Even though the recently held AGM did very little for the markets, let’s look at its key highlights.
The AGM was like the Indian version of an episode from the show, succession without the drama. Nita Ambani resigned from the board of directors and the Ambani kids are set to join it soon. An important sector being talked about is energy. Reliance is not going to alter its traditional oil business but it is definitely looking at using more green energy. Talking about power and energy, Reliance New Energy Ltd. has some long term plans, and the first of them is to set up a Giga factory by 2026.
There’s a lot to happen on the Jio front. JFSL will soon start its operations going into insurance. Jio telecom, which already occupies 85% or market for 5G internet services is launching the Jio Airfibre on September 19 with the aim of tapping over 200 million Indian households in the next three years. Jio is also looking at Jion home services, the Jio Bharat mobile phone, Jio cloud PC and more.
Market Moments with Divam Sharma | Weekly Wrap | Episode 3
Last week was a breather for American markets as positive macro trends lifted up markets a bit. A lot happened in our country too as GDP numbers were released, Reliance AGM held, Adani Probe discussed and so much more. We discussed it all in our Saturday live with our fund manager, Divam Sharma. This week, we talk about the economic indicators in detail and Divam helps understanding global growth concerns. Divam also addresses our investors’ questions about the HQRP and smallcap compounders smallcases. Watch the live to know what the markets are looking like.
The answer to this is index funds. Let’s see how. JFSL is formed out of Reliance Industries, an index company. Jio Financial Services, thus was also a part of the indices for a couple days after getting listed. This is to give index funds enough time to sell it because as per the criteria, JFSL cannot be a part of the indices or index funds. But since RIL was there in index funds, the index funds already had the stock and aggressively tried to sell JFSL. This bulk selling made the stock hit lower circuits. It happens whenever an index company has a demerger and doesn’t indicate anything negative about the company. We talked more on this here.
Ask us questions and we will take them up during the next live or the next newsletter.
Submit your questions here.
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Green Portfolio is a SEBI Registered (SEBI Registration No. INH100008513) Research Analyst Firm. The research and reports express our opinions which we have based upon generally available public information, field research, inferences and deductions through are due diligence and analytical process. To the best our ability and belief, all information contained here is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable. We make no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results obtained from its use.
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