Everybody knew India's current account deficit would go up because of high oil prices. The CAD rising to 2.9 percent in the July-September quarter from 2.4 percent in the previous quarter was hardly a surprise.But is the rise in deficit entirely due to high oil prices? Not really. While the deficit on account of petroleum, oil and lubricants (POL) went up by 58 percent from a year ago, the deficit on account of non-POL products rose by 50 percent. Clearly, it's not just oil that's driving up the current account deficit.This is seen more clearly if we consider quarter-on-quarter numbers. The POL deficit sequentially went up by a mere 1.3 percent in the July-September quarter this year. But non-POL deficit was up 17.5 percent over the same period.Close Manas ChakravartyMoneycontrol News Macro Matters | IMF and Moody’s say India will likely miss its government debt reduction targetsPolicy matters | The urgent need for restoring credibility to India’s macro dataMacro … [Read more...] about Quick Take | The rising current account deficit is not just because of high oil prices
Global oil and gas
Manas ChakravartyMarkets across the world have suddenly been spooked by fears of a growth slowdown. Here’s what the Reserve Bank of India said in its monetary policy statement a few days ago: "…global economic activity has shown increasing signs of weakness on rising trade tensions. Among advanced economies, economic activity appears to be slowing in the US in Q42018, after a buoyant Q3. The Euro area growth lost pace in Q3, impacted by weaker trade growth and new vehicle emission standards. The Japanese economy contracted in Q3 on subdued external and domestic demand."The RBI said growth was also slowing in some emerging markets, most importantly China. For India too, there have been warnings of lower growth after the September quarter gross domestic product growth came in lower than anticipated. Fitch Ratings has been the latest to jump aboard the bandwagon, reducing its estimate of India's GDP growth this fiscal from 7.8 percent earlier to 7.2 percent.Close … [Read more...] about Quick Take | Does the market really have a reason to worry about lower global growth?
The Indian benchmark indices ended the week on a negative note with the Sensex falling 2.2 percent while the Nifty was also down 2.2 percent. The Bank Nifty was down 2.4 percent with major banking stocks falling on the backdrop of the PNB Fraud investigation.Nifty Auto index clocked a 2.3 percent fall and the Nifty IT was marginally down 0.2 percent. The FMCG sector also closed in the red, down 1.8 percent for the week.The Nifty metal index which was the underperforming sector for the week, plunged 6.9 percent while Nifty Pharma shed 4.5 percent.Close Across the globe, the Nasdaq closed at record high on Friday as traders lapped up stocks like Microsoft, Netflix, Amazon.com and other high-performance technology names. The Nasdaq registered a gain of 9 percent year to date, compared to a 3 percent increase in S&P 500. related news Wall Street climbs on solid jobs data, trade hopes; Dow Jones rallies over 300 pts Wall Street opens higher after … [Read more...] about Weekly wrap: Global indices end on positive note; Sensex, Nifty register 2.3% loss
Dear Reader,From Arthur Conan Doyle’s ‘The Adventure of Silver Blaze’:Gregory (Scotland Yard detective): Is there any other point to which you would wish to draw my attention? Holmes: To the curious incident of the dog in the night-time. Gregory: The dog did nothing in the night-time. Holmes: That was the curious incident.Close The parallel between the little snippet from the Sherlock Holmes story and the Monetary Policy Committee (MPC) doing nothing at its December 5 meeting is rather neat. related news Robots are not just taking away jobs, they are making life tougher for staff OPEC agrees oil output cuts after much 'brain squeezing' Jute could be among priority industries to bet on in next rally Everybody, including yours truly, expected a rate cut, given the dismal GDP growth in the September quarter. We had argued a rate cut would not be of much use, but had little faith in the MPC’s intestinal fortitude for straying from the beaten track. Mea … [Read more...] about Moneycontrol Pro Weekender: The curious incident of the MPC in the slowdown
Shaktikanta Das, the new Governor of the Reserve Bank of India (RBI), is taking charge of the central bank in less than propitious circumstances. His predecessor’s resignation was clearly a protest against the government trying to impose its will on the institution. In that context, Das’ most important task is a simple one --he will have to prove that he is his own man.Admittedly, the new incumbent at Mint Street starts off with a handicap. While his vast experience in managing economic affairs is not in question, he has an unfortunate reputation as the man under whom the government launched its controversial demonetisation programme. The speed with which he has been appointed has also raised questions whether this was the government’s game plan all along.While several bureaucrats from the Finance Ministry have gone on to become excellent RBI governors and have asserted their independence, they did not assume office in similar circumstances. Simply put, Das will have … [Read more...] about Opinion | Shaktikanta Das will have to prove he is his own man