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India Investments: India's Economic Fortitude looks at a silver lining

The HSBC MarkIT PMI numbers for India came to a good 52 with the Factory Output Index a higher 52.7 Earlier despite variance with

The North Block, in New Delhi, houses key gove...

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official China PMI numbers, HSBC reported a higher 51.1 PMI n China with the Factory output index a high 51.7

Exports continued their healthy growth in September growing 36% but even as the trade deficit came back to $9.8 bln in September and imports grew by 20% only, the trade deficit is galloping to a $42 bln gap for the year at a $10 bln over run per quarter The growth in exports, verified to an extent by data on port shipments (RBI:Governor’s Interview on B-UTV) is a welcome addition of $6 bln to India’s topline everymonth, coming to $24.8 bln in September after a $18 bln September 2010

India’s lowest PMI was 50.4 in September with Factory output at 51. Official IIP figures have been low at 3.3 and 4.1 % in August and September and despite retail sales sitting pretty October is likely to report a lower manfacturing number Asia thus seemingly bottomed out two months back and may outperform the global expectation of a 4% growth in 2011

HSBC global locations

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India has turned around on PMI data after a Output index fall for 5 straight months and a global recession like faux pas mid year when Services orders fed to an all time low and lack of pipeline not just in India and China but also with the collapse of an incipient recovery in the US as Europe also broke down by September. This means most economic data had been leaning towards a double bottom keeping all predictions on a waving borderline between hope and hell

India’s festival time auto sales are expected to take October 4 wheeler sales to 170,000 after consecutive months below the 150k mark Maruti’s market share has dipped to below 40% and October has seen only 55600 Marutis after strikes at its Gurgaon/Manesa plants. They are adding capacity in Gujarat closing a land deal with the Gujarat state

All of India’s exports seem to cover only the non oil imports of $320 bln (run rate for FY 2012) and the Oil bill of $145 bln run to the entire trade deficit.

India’s rate structures seem to be now expected to weather these actively recessionary trends with an ever rising fisc and a mini upsurge in commodities. The Divestment target alone leaves a gap of $8 bln in the fiscal deficit as also a $2-3 bln sting from a creep in the trade deficit and a $8 bn sting from lack of revenue collections ( though service tax receipts have grown 37% in the first half on a small base), additional borrowings and the oil subsidies going to twice the last years figure but at least $2.5 bln higher for the government’s contribution

Structural inflation in India is expected now to cool off in December despite the government running 70% of its deficit by September at 2.92

MUMBAI, INDIA - APRIL 02: Yuvraj Singh (C) and...

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lakh crores ( Rs 3 Tln)

The Fisc crossing a 24% uptick to well over 5% despite expense control keeping September figures on expenditure at 48% of the BE/RE means that this systemic issue is likely to rear its head again in another few months even if inflation does come down by December and agri support pricing and/or Food Security propositions will likely ake the fall India FDI growth to $15 bln for the 6 months augurs well however and India still has the reform window open but in the Federal structure the coming state elections will be an equal priority for the Central government despite its stable provenance till the 2014 General elections

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This entry was posted on November 1, 2011 by in Amitonomics, Emerging Markets, Financial Services, Global, Private Equity and tagged , , , .

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