After a strong 2017 for equities, the market has retreated in the first 3 months of 2018.
India is ranked the 7th largest economy in the world by the IMF for 2018 and well positioned to get to number 5 by overtaking Germany and the UK. With GDP growth forecast at 7.4% for fiscal 2019, we will see this move happen quickly. Good economic fundamentals persist with the latest reading on consumer inflation of 4.4%, the central bank’s neutral stance on rate changes, currently at 6%, a normal monsoon predicted, which is hugely important for the agriculture sector. Note that the agriculture sector employs half of the total workforce and accounts for 18% of the GDP.
Flow of funds into the equity market from both domestic and foreign institutions remain favourable and we are glad to see that the strong domestic appetite for equities as witnessed by a 73% higher inflow vs foreigners during the quarter. The total net inflow was US $ 39 bn.
Challenges seen came from the banking sector with news of frauds. Higher oil prices also hurt India. However, economic activity improves and automotive sales, air traffic, retail credit are strong and several economic indicators have started to look up starting with the earnings numbers for the quarter.
Domicile: Malta, Source: Bloomberg, Unifi, IMD