It has been two years since Narendra Modi came to power and has been leading the Indian Government to solve bottleneck issues that can propel the country’s economy forward. The second quarter proved to be one of the busiest periods for the Indian parliament as they passed seventeen new bills among which the Bankruptcy Bill is considered to be of outmost importance as it allows creditors to resolve defaults in a much more expedient manner. The Reserve Bank of India (RBI) was also affected by these bills as amendments made to the RBI Act have specified that the RBI will have an inflationary target of 4% set by monetary policy trough the Monetary Policy Committee. Although for the time being, the RBI is set to hold on to current policy and holds reserves of $360.9 bn.
Indian equity markets outperformed their global peers on the back of an improved outlook on corporate earnings and policy support. In fact, the MSCI India Index was up 1.96% for the month of May. The Consumer Price Index (CPI) increased by 5.4% in April which was mainly due to an increase in food prices. The manufacturing and mining sectors of the Indian economy contracted by 1.2% and 0.1% respectively while the capital goods sector also contracted by 15.4%. Towards the quarter end, we reduced our cash position to almost 0% as our models were turned bullish.Data sources: Bloomberg & Unifi