Wealh Management - Sushil Finance
Key updates and highlights of the week.
Key highlights of RBI Monetary policy
Rate Hike: RBI hikes repo rates by 35 bps to 6.25%
RBI stance: Stance focused on withdrawal of accommodation. For Indian economy, the outlook is supported by good progress of sustained urban demand, improving rural demand, a pick-up in manufacturing, rebound in services and robust credit expansion.
Forex reserves: Size of forex reserve comfortable and has gone up from USD 524 billion (Oct 21) to USD 551.2 bn as of Dec 2.
Inflation: Inflation expected to be above 4% in the next 12 months. Inflation aims retained at 6.7% for FY23
GDP: growth forecast for FY23 revised downwards to 6.8%. GDP growth forecast for Oct-Dec 2022 lowered to 4.4%, Jan-Mar 2023 lowered to 4.2%.
CPI inflation forecast for Oct-Dec 2022 raised to 6.6% from 6.5%.
The RBI policy stayed very aware of the global slowdown and its spill overs while acknowledging the resilience of the Indian economy, may not be last rate hike.
Hedging of Gold price risk now allowed by International Financial Services Centre.
Election Update
Gujarat: BJP regains power in Gujarat for the 7th term
BJP has won Gujarat elections by gaining the 156 seats out of 182, while the opposition party Congress got 17 seats and AAP Got 5 seats.
BJP had set targets of 150 seats, sets a new record in the home state of Narendra Modi with the historic victory. Bhupendra Patel will continue be the CM,his swearing ceremony to take place on 12th Dec 2022. The committee members were tasked to extend the party’s outreach, to connect with more voters.
They had been working on the ground for the last two years ensuring that people get benefits of all the state schemes.
A committee of 10 members headed by one had the responsibility of 10 families to register them for the electoral list, due to all these efforts the party won with the highest ever vote share.
Himachal Pradesh: Congress gains power but the drama for CM continues.
Congress scored a victory in Himachal Pradesh by winning 40 of the 68 seats, BJP won 25 seats and other independent candidates won 3.
After its victory, Congress tackled chaos in Shimla for the meeting for picking the CM, the workers raised slogans showing aggressive support for the state chief Pratiba Singh.
The top candidates for the CM are Sukhvinder Singh Sukhu, Mukesh Agnihotri, and Harshwardhan Chauhan. 23 first-time MLAs in 68-member Himachal assembly. Eight cabinet ministers were trounced.
The final decision is yet to be made as the key meeting is underway to pick the CM.
Credit Suisse warns about the slow future growth in US.
The US economy is widely expected to fall into recession in the second half of the year 2023 because of the US Federal Reserve’s aggressive constriction of the monetary policy to be stabilize the economy. The US Federal Reserve has increased 350 basis points since March. Recession in the US economy will negatively affect the export oriented sectors of Developing markets.
Oil loses the years’ profit, to close on a low in 2022
The worsening Russia-Ukraine crisis brings down the oil prices at their lowest in 2022 on 06th Dec Wednesday. The world’s most actively traded commodity had rose up to $170, almost reaching the all-time high.
The market has been gradually declining due to the weak worldwide global growth and partly due to high energy cost. Brent futures fell to $75.54, nearing almost its 1 year low.
The API indicated that the crude oil stocks have fallen by about 5.2 million barrels for the week, but is expected to fall close to 6.4 million barrels.
India-Australia Free Trade Agreement, how it will this benefit India Australia is India’s 17th largest trading partner; India is 9th largest trading partner for Australia.
The bilateral trade was valued at US$27.5 billion in 2021 and is expected to grow to US$45 billion after the treaty comes in place.
The agreement is to come in force from 29th of December 2022. Australia will provide zero duty on 100% of its tariff lines (98.3% now and rest 1.7% in phased manner) and India in turn would provide 70.3% of its tariff line (40.3% now and 30% in phased manner).
Economic Corporation and Trade Agreement (ECTA) will help to encourage business growth between two countries and will provide employment to over a million people over the next 5 to 7 years. This is a significant milestone for India to achieve the aim of reaching the $2 trillion export target by 2030.
Regards
Manan Divan