Macro and micro economic indicators are pointing in opposite directions

Broader economic indicators have been deteriorating and the picture can become grim as sustained deterioration in macros can derail growth.

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Broader economic indicators have been deteriorating even as specific sector-related metrics have shown visible improvement.
Over the past few months, broader economic indicators have been deteriorating even as specific sector-related metrics have shown visible improvement.

The picture can become grim as sustained deterioration in macros can derail growth.

WEAK MACROS


Crude oil prices have soared in recent months
Oil prices continue to rise, and this will inflate India's import bill and add to the trade deficit.
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Compiled by ETIG

The rupee's value is tumbling daily against the dollar
The rupee has weakened along with other EM currencies, putting more pressure on trade balance.
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Compiled by ETIG

The current account deficit is gradually widening
With import bills rising, India's current account deficit can worsen.
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Compiled by ETIG

Consumer inflation is inching up, but so far under control
If oil prices keep rising and rupee weakens further, inflation is likely to shoot up. Source: Bloomberg.
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Compiled by ETIG

Monsoon has steadily weakened, ending in a 9% deficit
Cumulative rainfall (% departure from long period average)
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A deficient monsoon threatens to add to inflationary pressures on the economy.
Source: IMD, MOSL

HEALTHY MICROS

Automobile demand was strong...
After a strong pick up, passenger vehicle sales have slowed down on the back of rising fuel prices. However, commercial vehicles still continue to fare well.
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Source: ACE Equity

Consumer discretionary spending is on the rise
Consumption at a high with rising disposable incomes. Higher interest rates and inflation can be dampeners.
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Source: Kotak Institutional Equities

Cement offtake has been robust in recent months
Cement demand has shown improvement as housing and infrastructure spending has picked up.
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Source: MOSL

Capital goods firms are showing improved growth
Improved pipeline of fresh orders and better project execution has benefited engineering firms
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Source: Prabhudas Llilladher

Power consumption has slowed down
Not all micros are indicating strength. Slower offtake of electricity suggests lower industrial activity
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Source: Kotak Institutional Equities


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