Economy
SBI Index shows a decline in growth in September 2016
The yearly State Bank of India (SBI) Composite Index, an indicator for tracking India’s manufacturing activity, is indicating downward momentum in September 2016 and just above 50 at 50.2 (low growth), compared to last month's index of 52.7 (moderate growth), portending a decline in growth.
 
"We expect that the credit cycle will turn for the better in a gradual manner. The good thing is that a part of the slowdown in corporate credit growth in the current fiscal is because of deleveraging by corporates and subsequent repayments. Retail credit growth continues to be strong. Additionally, about 48% of the credit upgrades in second half of FY2016 was due to better order book and healthy demand, improvement in profit margins and efficient management of working capital," says SBI in its Ecowrap report.
 
 
The fortnightly data of all scheduled commercial banks (ASCB) indicates that credit off-take is in a single digit at 9.8% as on 2 August 2016. SBI says, the bad thing is that debt weighted credit ratio (DWCR) worsens in FY2016 (all rating agencies) - the ratio declined below 1 in FY2016 - from 1.24 to 0.79 in FY2016. Hopefully, there should be a medium term course correction, it added.
 
According to the report, even as year-on-year growth has improved in recent weeks, but the year till date (YTD) growth is actually showing a decline. This YTD decline is possibly attributed to repayments made by oil companies, non-banking finance companies (NBFCs) and some corporates to the banks since March 2016.
 
 
It says, "The banking sector loan book is not showing significant traction as of now, on the back of a stagnant pipeline of projects. In our view, the year is likely to see a 13-14% credit growth, but mostly on the back of refinancing by banks on completed infrastructure projects in sectors like power, roads, where there are no risks. In the coming months, there may be some demand from the retail side due to the festive season. We also believe oil companies and NBFCs may avail of credit growth in the second half current fiscal."
 
"Overall, demand still remains a significant laggard in the system. With the pay commission arrears implemented from August 2016, bank deposits have shown a sizeable growth in September (over 20% of the incremental addition in current fiscal is attributable to such). This will lead to increased consumer demand ahead of festive season. We are pencilling in a 50 basis points rate cut by Reserve Bank of India (RBI) in its monetary policy during the current fiscal," SBI Ecowrap report concludes.

User

COMMENTS

Dr. Shyam

2 months ago

SBI collected insurance money on over Rs.50 Lacs stock of my company STPL but never given any insurance policy or a method of making any claim for damages was simply a money taking mechanism. SBI finally closed my Rs.25 Lacs CC Limit even though we never defaulted in any payment of interest ever since. Obviously they were rude to companies and caused huge loss to companies by demanding return of loan in just few days. Such banks must fail for sure as they are in wrong hand and most of the GM come from South India who are extremely bad in behaviour in Northern States. SSI was really made to suffer in North by SBI officials. I reported this matter but none took it seriously and never admitted they did wrong for decades to companies. They often blocked CC Limit and only on complaits to head office, they used to respond. Horrible experience.

Nifty, Sensex may rally a bit – Thursday closing report
We had mentioned in Wednesday’s closing report that Sensex, Nifty await Fed actions. The major indices of the Indian stock markets rallied strongly on Thursday, as the Federal Reserve maintained interest rates unchanged, to close around 1% higher than Wednesday’s close. The trends of the major indices in Thursday’s trading are given in the table below:
 
 
Indian equity markets soared on the back of positive global cues on Thursday. The key indices gained around a percentage each during the mid-afternoon trade session, as healthy buying was witnessed in stocks of banking, automobile, and capital goods. The BSE market breadth was tilted in favour of the bulls -- with 1,695 advances and 1,044 declines. On the NSE, there were 993 advances, 471 declines and 74 unchanged.
 
The Fed's decision to hold interest rates fuelled a rally in the equity markets globally leading to a sharp gap up move in our markets as well, according to market analysts. Initially on Thursday, the benchmark indices opened in the green following positive global cues. Investors' sentiments were buoyed on the US Federal Reserve's decision to keep its key interest rates unchanged for September. Besides, domestic cues such as the proposal to merge the general and railway budget, along with consultations to advance the budget presentation date, gave a positive momentum to the equity markets.
 
Union Finance Minister Arun Jaitley on Thursday said that infrastructure is the key to economic growth. Jaitley said this in his inaugural address at the BRICS (Brazil, Russia, India, China and South Africa) India 2016 seminar on "Best Practices in Public Private Partnerships (PPPs) and Long-term Infrastructure Financing".  The one day seminar was organised in the national capital by the Department of Economic Affairs, Ministry of Finance, with organisational support from the Confederation of Indian Industries (CII). Delegates from BRICS countries and senior officials of the Finance Ministry, along with senior executives of private sector companies participated in the seminar. It was organised in the run up to the BRICS Summit scheduled for October, 2016. India assumed the chairmanship of BRICS in 2016. According to Jaitley, an institutionalised forum amongst BRICS countries could serve as a regional knowledge hub with exchange of information facilitated through cloud sharing, and other electronic methods.  He pointed out that development projects in transportation sector like highways, ports and railways will be the area of mega economic activities as far as the infrastructure sector in India is concerned. The Finance Minister further said that investment from both the public and private sector will be required for financing projects in the areas of health, education, sanitation, renewable energy, highways, ports and railways among others. There is likely to be a good opportunity for investors in India in the infrastructure sector.
 
The US dollar decreased against other major currencies as investors were digesting the latest Federal Reserve statement. In the statement released on Wednesday after Fed's two-day policy meeting, the US central bank decided to keep its federal funds rate unchanged amid recent weak economic data and tepid inflation. "The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives," said the statement.
 
As the global financial markets waited nervously, the US Federal Reserve kept its key interest rates unchanged -- a move that should bring some cheer when Indian markets open on Thursday. "The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives," said a statement by the Federal Open Market Committee after a much-watched, two-day meeting. The committee said even though unemployment rate is little changed in recent months, the job gains have been solid, even as household spending has been growing strongly. But business investment has remained soft, while inflation has continued to run below the 2 per cent long-term target. "Against this backdrop, the committee decided to maintain the target range for the federal funds rate at 0.25% to 0.50%."
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

User

Government names three academics to Monetary Policy Committee
Three academics from the country's top institutions have been named the government nominee members to the Monetary Policy Committee that has been mandated to ensure the country's retail inflation stays within a band of 4 percent, plus or minus two percentage points.
 
The names, cleared by the Appointments Committee of the Cabinet, are: Chetan Ghate, Professor at the Indian Statistical Institute; Pami Dua, Director at Delhi School of Economics; and Ravindra Dholakia, Professor at the Indian Institute of Management, Ahmedabad.
 
On its part, the Reserve Bank of India (RBI) has already named its set of three representatives to the six-member committee -- the Governor, at present Urjit Patel who is also the chair with a casting vote, Deputy Governor R. Gandhi and Executive Director Michael Patra.
 
With the full membership of the panel in place, the next bi-monthly monetary policy update of the Reserve Bank of India, scheduled on October 4, is expected to go by the recommendations of this panel, including a call on interest rates, officials said.
 
The government had said its three members will be experts in the field of economics, banking, finance or monetary policy and will be appointed for a period of four years -- and will not be eligible for re-appointment. 
 
The panel is to meet at least four times a year and publicise its decisions after each meeting.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)