DSP TATHYA - June 2023

Consumer sentiment is clocking record high, showing faith in the Indian economy. It is hard to find signals of marked slowdown in India’s high and low frequency indicators. The moderation in passenger vehicles is partly owed to high base

Inflation eased to 4.3% in May-23 as food inflation eased. Core inflation is off-highs now but services inflation can ease further. There’s a case for inflation to surprise on downside

Industrial activity appears strong, especially construction. Manufacturing PMI throws light on robust sentiment

Services PMI shows unprecedented strength. Clearly, the exports uptick is keeping the sentiment high. Other indicators are robust too, adjusting for base

10-year Gsec yields have eased from highs. We re-iterate that this is the least constrictive monetary policy with surplus liquidity being maintained. CD ratio points at good credit offtake

On fiscal front, FY24 has started with excess RBI surplus but also with higher subsidy announcement for fertilizers. We expect the year to close as per the budget estimates

External headwinds have eased and RBI has started to re-build the reserves while keeping the currency almost at similar levels. Services exports are cushioning our goods deficit

India saw FII inflows in both equity and debt. 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, MF equity flows slowed though the SIP book remained robust