THE
WEEKLY FINANCIAL NEWS
Officials
urge patience as the Fed continues to trim the purchases.
Even as the
indices closed the first week of the New Year in deep red, leading global
brokerage Credit Suisse today said it is "overweight" on Indian
stock markets as the cyclicals are set to outperform defensives driven by
the forthcoming elections.
The government's
zealousness in squeezing expenditure to meet the fiscal deficit target,
either by delaying payments or not awarding new contracts, may be hurting those
most vulnerable to such tightening — small and micro enterprises, self-employed
professionals and the retail trade.
The global
economy had another difficult year in 2013. The advanced economies’
below-trend growth continued, with output rising at an average annual rate of
about 1%, while many emerging markets experienced a slowdown to below-trend
4.8% growth. The economic performance will pick up modestly in
both advanced economies and emerging markets this year with
advanced economies rising at an average rate of 1.9% and emerging markets
growing faster in 2014- closer to 5% year-on-year.
Will inflation recede?
Will the current account deficit remain under control? Will the
government meet its fiscal deficit target? Will investment activity
pick up? Will the effect of quantitative easing be benign? The answers to
these five questions will be important for the Indian economy in the coming
months.
The HSBC
manufacturing purchasing managers’ index (PMI), compiled by Markit, fell
to 50.7 in December from 51.3 in the previous month. The index, which gauges
business activity in Indian factories but not its utilities, spent three months
below the 50 mark that separates growth from contraction before
rising above it in November.
For the top 20 public
sector banks, net NPAs plus recast loans make up for as much as 96% of
their net worth at the end of September. 2014 will be a year of
uncertainty for the banking industry. The light at the end of the tunnel will
begin to shine only when the economy strengthens.
Besides, proposing 100 per
cent FDI through automatic
route in the cash-starved railway sector, the Department of Industrial Policy and Promotion (DIPP) has also proposed to de-license and
de-reserve few areas of the sector. "The Commerce and Industry Ministry has
sent the cabinet note on the matter and a decision is likely to be taken this
this month only."
Flows from FIIs in Indian
equities are likely to continue at the same pace as we saw them in 2013. But
there are two key concerns—the state of the domestic economy and
potential increase in Fed’s tapering.
Macroeconomic factors,
other than lack of faith, are likely to be speed breakers for
M&A’s growth momentum in the immediate future.
With Fed taper discounted, markets poised for a big leap
By Motilal Oswal, Chairman &
Managing Director, Motilal Oswal Financial Services
Economic outlook 2014: New government will
have to hit the ground runningBy Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII)
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