DSP TATHYA - August 2023

Consumer confidence remains strong, as reflected by the steady expansion in personal loans. The downward trajectory of automobile sales could persist through August, and its reversal is expected only when the festive season commences.

The dramatic rise in headline inflation is majorly driven by food inflation, especially vegetables. Core CPI, thus, with no surprise, continues to fall, recording it’s lowest print since Aprl’20

The index of eight core industries grew at a steady pace, despite a high base. Steel production has shown substantial expansion. Manufacturing PMI continues to remain robust. The deflationary pattern in WPI translates into better margins for firms.

Amidst a global economic slowdown, the Services PMI has achieved a historic peak. The moderation in Airport and Railway traffic, is purely owed to high base.

The growth of money supply has eased from the recent peak, and is expected to further decelerate due to proactive measures taken by RBI in this regard. 10 -year Gsec yields have remained stable, as the negative data was already priced in.

On fiscal front, GST collections have remained healthy, validated by an equally robust expansion in E-way bills.

The stable INR is attributed to a robust expansion in foreign exchange reserves. A weakening dollar index appears to have exerted downward pressure on the currency basket. Oil price increases due to supply disruptions have led to minor increase in the Crude Indian Basket.

While FII flows are robust in equity, the debt portion has also revived after a temporary fall. We re-iterate that given India is appearing a steady ship in choppy waters, it is likely to get its fair share of FII flows. Even though MF equity flows have slowed, the SIP book experienced a notable increase.