stockaxis Market Intelligence (Commentary for January 2019; Outlook for February 2019)

We are pleased to present to you our monthly market commentary and outlook for the forthcoming month. The ‘StockAxis’ Market Intelligence’ is a quick update on the markets for the month gone by and our view for the next month. Use our sharp and crisp synopsis to continue building your wealth!

Global Trends

World Bank predicts India GDP to grow at 7.3% in 2018-19 and the country will continue to be the fastest growing major global economy. India’s FY20 GDP growth pegged at 7.5% by India Ratings.
United States to continue being the principal market for Indian services and will fuel India’s march towards becoming a USD 5 tln economy by 2022, according to KPMG.
World Economic Forum report states India likely to become third largest consumer market with consumer spending expected to grow from USD 1.5 tln at present to USD 6 tln by 2030.
PwC report indicates that India may move ahead of UK in the world’s largest economy rankings. UK’s real GDP to grow at 1.6% while India projected to grow at 7.6% in 2019.
Deloitte survey shows that India is making good progress in dealing with challenges thrown by the 4th Industrial revolution especially in areas such as society, strategy, technology and talent.
PwC survey shows that India is the 4th most attractive investment market for global CEOs.
India is among the most trusted nations globally, according to the 2019 Edelman Trust Barometer report.
India’s exports to China higher by 32% during June-Nov 2018. Exports to China rose from US$ 6.37 bln in corresponding period last year to US$ 8.46 bln.
India’s ranking rises to 77th in the World Bank’s ‘Ease of Doing Business’ rankings 2019.
Foreign Direct Investment into India was USD 37.3 billion in 2017-18 as compared to USD 36.3 billion in the previous fiscal, RBI data indicates.

Domestic Trends

NASSCOM indicates that growth momentum remains strong for Indian IT companies. Ongoing global push for digital transformation is making the Indian IT industry stronger.
Medications for chronic diseases spurt growth in Indian pharmaceuticals sector, which is poised to grow 9.4%, says market research firm AIOCD-AWACS.
Frost & Sullivan predicts online pharma sales to reach Rs. 25,000 crore mark by 2022.
Strong order inflow coupled with huge pipeline of projects to be awarded is leading to the emergence of a stable construction sector, according to ICRA.
India Inc. upbeat about growth prospects; expects growth exceeding 7% in coming 12 months, according to survey conducted by PwC-FICCI.
Naukri JobSpeak Index registers an 8% growth in hiring in December 18 led by auto and HR segments.
Business school hiring sees positive growth with average CTC up by 20% and average salaries expected to rise 15-20% in the final placement season.
9 major cities see housing sales higher by 7% as new supply falls 22% to 1.46 lakh units during 2018, says data analytics firm PropEquity.
65.8 lakh houses approved for construction under Pradhan Mantri Awas Yojana-Urban (PMAY-U). Global firms to be invited to India to demonstrate construction techniques for affordable housing.
49 institutes make it to the top list of Times Higher Education, while 25 Indian institutes among the world’s top 200.
Council for Leather Exports says leather sector expects to grow at 5-6% in terms of exports in 2018-19.
Pradhan Mantri Sahaj Bijli Har Ghar Yojana launched in September 2017 will lead to India achieving universal household electrification in 2019.
Supply of office space rises 17% to 34.9 mln square foot during 2018 with office absorption touching 47.4 mln sq. feet, according to a report by CBRE South Pacific.
Insurance sector rides robust GDP growth to witness strong growth with total gross premiums for non-life and life sectors growing 11.5% to Rs. 6.1 lakh crore in Fiscal 2018.
Media and entertainment industry can touch US$ 53,683 mln by 2022, according to joint study by Assocham-PwC.
Weak Rupee and strong demand drives textile sector with India Ratings maintaining a stable outlook on the sector.
India’s forex reserves rose from US$ 393.4 bln on January 4, 2019 to US$ 396.68 bln on January 25, 2019.
The Nikkei India Manufacturing PMI rose to 53.9 in January 2019 from 53.2 in a month earlier and beating market expectations of 52.5. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month.
The Indian Rupee weakened vis-à-vis the dollar; it was at INR 71.1793 on 31 January 2019 against INR 69.74 on 1 January 2019.

Market Trends

Initial Public Offerings (IPOs) gather Rs. 2,455 crore in 2018 compared with Rs. 1,785 crore gathered in 2017. Going ahead, IPO pipeline looks attractive.
Falling dollar and a cautious Federal Reserve push Asian stocks to a four-month high.
FIIs recorded a net outflow of Rs 4,262.01 crore in January 2019 against inflow of Rs. 3,301.45 crore in December 2018.
The Nifty closed at 10830.95 on 31st January 2019 against 10,862.55 on 31st December 2018, having fallen marginally by 31.6 points over the previous month.
The Nifty 50 P/E ratio was at 26.26 at end-January 2019 against 26.17 at end-December 2018. The average P/E ratio for the past 12 months is 26.31.

Highlights

The Good: Economic growth momentum to continue, improvement in employment numbers, India - attractive consumption market
The Bad: Global trade slowdown, election uncertainty

StockAxis’ Outlook for February 2019 and Interim Budget Highlights

The interim budget was presented by the Finance Minister on February 1, 2019. Sectoral-specific implications and specific relevant budget announcements are as follows:

Rural Sector: The key highlight was the announcement of the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan), which provides small farmers a sum of Rs. 6,000 each year. 12 crore farmers are expected to be the beneficiaries of this scheme. There was also an announcement for the creation of a separate Department of Fisheries and the Finance Minister announced a 2% interest subvention to farmers who pursue animal husbandry and fisheries provided they avail interest using their Kisan Credit Cards. In event of a timely repayment of the loan, they are entitled to an extra 3% interest subvention. The budget’s aim has been to lift rural incomes and provide relief, which increases the appeal of the sector and also its ability to contribute to national growth.

Infrastructure: With 27 Km of roads constructed each day in India, the country has emerged as the fastest highway builder in the world. Some projects that have been completed include the Bogibeel bridge in Assam and the Eastern Peripheral Expressway. This sector has been given a strong impetus with robust government support.

Consumption: A slew of announcements were made with regards to Direct Taxes, which are all aimed at raising discretionary spending power of the Indian consumer. Tax exemption for income of up to Rs. 5 lakh and a hike in standard deduction from Rs. 40,000 to Rs. 50,0000 were announced. This bodes well for sectors like FMCG, consumer durables and automobiles that will get a boost from the increased purchasing power of the average Indian. The transformational impact of the budget with focus on making India a major world consumer market is immense.

Real estate: Capital gains tax exemption is now available for two residential houses (earlier, it was available only for one residential house) up to the value of Rs. 2 crore. Notional rent for unsold stock of property has been waived for 2 years. Tax on notional rent on second homes has been abolished. These announcements are positive for the real estate sector.

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