The Indian government came out and lashed out at the former Chief Economic Advisor, Arvind Subramanian, who had opined that India’s actual growth in GDP in the last few years could have been closer to 4.5% rather than the stated 7%. However, the Indian government has dismissed these claims. The government confirmed that the MOSPI uses accepted and test methodologies in measuring growth. The debate on growth is back at the forefront after the fourth quarter GDP growth came in at just 5.8% and the full year growth faltered to 6.8% for the fiscal year 2018-19.
Global markets had some reasons to cheer as the Chinese markets led equities higher on the back of a government announced stimulus. With GDP growth faltering in China and exports growing at a much slower pace, Beijing has rolled out a stimulus package offering easier financing rules and a boost to public works spending by local governments to spur growth. The Shanghai Composite was up by 2.6% in a single day and the optimism rubbed off on Indian markets too. Metal stocks were among the key gainers since China continues to be the largest consumer of almost all the metals.
The woes of the auto sector continued with the passenger car segment among the worst hit. In fact, passenger car sales fell sharply by 26% in the month of May 2019. According to the latest data released by SIAM for the month of May, domestic passenger car sales fell by 26% to 1.475 lakh units. The sharp fall in auto sales was on the back of weak demand, postponement of purchases and tighter financing markets. This decline was visible across all the passenger car segments including compact cars, entry-level cars, and high-end SUVs, with only the compact segment performing slightly better.
Apparently, the Kingdom of Saudi Arabia (KSA) has more oil reserves than we had believed all these years. British Petroleum *(BP) has upgraded Saudi Arabia’s oil reserves by 12% for the first time since 1989. BP has upgraded Saudi Arabia’s proven oil reserves at 297.70 billion barrels as against the current estimate of 266.20 billion barrels. However, Saudi is still slightly behind Venezuela which has proven crude reserves of 303 billion barrels. Long cagey about its actual reserves, KSA has become more open ahead of the proposed Saudi Aramco IPO, which is expected to happen in the next 1 year.
What was anticipated all these days has finally been officially announced. The EU regulators blocked Tata Steel – Thyssen Krupp joint venture proposal. The EU anti-trust regulator blocked the proposed JV on the grounds that it would kill competition in the EU region and lead to a rise in the price of steel. While the intent was to tackle overcapacity, the EU objected that its concerns were not fully allayed. Last month, Tata Steel and Thyssen Krupp had hinted that the deal may not go through as they were not willing to offer further concessions. Tata Sons was hoping that it would monetize its European steel operations and reallocate the funds released towards expanding its India franchise. But that will now have to wait for some more time till there is an option that is available for the European business.
Finally, there is some good news for the mid cap funds in India. Mutual Fund May inflow data sees investors favouring mid cap funds as these mid cap funds collected Rs.1272 crore in May 2019 compared to just Rs.491 crore in the month of April. This sharp rise in mid cap fund collections was largely driven by cheap valuations of mid cap stocks and a rise in investor confidence after hopes of a stable government at the centre started building. Among the debt funds, FMPs continued to be at the receiving end of investor ire after the recent fiasco where FMP redemptions had to be postponed.
