Moving From ‘Negative To ‘Stable

Indian frontline indices BSE Sensex and Nifty soared high like an eagle during the fortnight, recording new all-time highs of 61,353.25 and 18,350.75, respectively. Both indices ended with gains of 4.32 per cent and 4.60 per cent, respectively. BSE Mid-Cap and SmallCap indices outperformed the broader markets and rose by more than 5.85 per cent each. The Monetary Policy Committee (MPC), during its latest meeting on October 8, 2021, kept the repo and reverse repo rates unchanged at 4 per cent and 3.5 per cent, respectively. It has retained the monetary stance as ‘accommodative’.

This is the eighth consecutive time the MPC has maintained a status quo in rates. The projection for real GDP growth is retained at 9.5 per cent for FY 2021-22. The central bank has lowered its FY22 CPI inflation target to 5.3 per cent from the earlier 5.7 per cent. Moody’s Investors Service has changed the outlook on India’s ratings to ‘stable’ from ‘negative’. The global financial research agency said the decision to change the outlook to ‘stable’ reflects its view that the downside risks from negative feedback between the real economy and financial system are receding. 



Moody’ Investors Service has said in its latest report, “With higher capital cushions and greater liquidity, banks and non-bank financial institutions pose a much lesser risk to the sovereign than what was previously anticipated.” BSE Auto index jumped 11.01 per cent during the fortnight and was the top gainer. Domestic fund managers have increased their exposures in the automotive sector, betting on robust festive demand despite semi-conductor chip shortages.

As per data from top 20 domestic mutual funds, the weightage of automobile stocks by mutual funds climbed to 6.1 per cent in September, 2021. As per data released by the National Statistical Office (NSO), the Consumer Price Index-based (CPI) inflation for September 2021 came in at 4.35 per cent as compared to 5.30 per cent in August 2021. This is the lowest retail inflation print since April 2021. The fall in headline retail inflation was primarily on the back of a sharp cooling in food inflation. Consumer Food Price Inflation (CFPI) index for September stood at 0.68 per cent in September, compared with 3.11 per cent in the previous month.

The central bank has lowered its FY22 CPI inflation target to 5.3 per cent from the earlier 5.7 per cent.

India’s Wholesale Price Index (WPI) weakened to 10.6 per cent for the fourth straight month in September 2021 from 11.4 per cent in August 2021, underpinned by weakening fuel inflation, including that of petrol, LPG and high-speed diesel. The central government has recently allowed 100 percent foreign direct investment (FDI) across all kinds of telecom services and infrastructure providers in the telecom sector through the automatic route to promote ease of doing business in the industry.

The Department of Telecom (DoT) slashed the performance and financial bank guarantee requirements of telecom operators by 80 per cent. Power generation between April and September 2021 rose by over 11 per cent compared to the same period of the last fiscal. The surge in demand was expected as the economy recovered off a low base. Energy consumption stood at 114.5 billion units (BU) for September 2021, flat on an annual basis. BSE Power index gained 9.70 per cent during the fortnight to end at 3,514.86. Trading data shows that FIIs were net buyers to the tune of Rs. 225.94 crore, while DIIs were net sellers to the tune of Rs. 451.84 crore during the fortnight.