Dear Reader, 

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

The start of the week will see investors sift through a variety of macro data, to try and make sense of where the economy and by corollary companies are headed. It’s a task made complicated by the biases we possess, bulls wear green-tinted (or rose-tinted if you like) glasses and bears red-tinted ones. Us? We don’t take sides.

On Monday, the HSBC India Manufacturing Purchasing Managers’ Index (PMI) for August came in at 57.9, down from July’s 58.1 which points to some deceleration but still, considering that 50 separates expansion from contraction, we are in very healthy territory. Inflation pressures and competition are headwinds for outlook, noted the survey. Net GST collections dipped by 3.8 percent in August compared to July, although they were up 10 percent YoY. Automobile sales data released by listed companies show a mixed picture of how this crucial sector is performing. There have been concerns due to an inventory build-up. The analysis by Neha Gupta of our research team points to a mixed trend in August, with two-wheelers and premium cars faring well but other segments reflecting a subdued trend.

However, do remember that GST collections tend to vary a bit month to month and one should wait for a few months to get a clearer picture, especially as the festival season is coming up. But the main data point for investors to consider is the Q1 GDP data. While the headline numbers pointed to a slowdown, coming in at 6.7% YoY compared to 7.7% in the March quarter, the bigger story lies in the details.

In his weekend column, my colleague Manas Chakravarty had pointed out that the Gross Value Added was much higher than the median estimate of RBI’s professional forecasters, that private consumption had turned healthier and that despite a widely-expected slowdown in capital formation, the actual numbers reported a much better capex showing. That could have meant only one thing, that private capex did the heavy lifting.

He followed that up with an in-depth look into the data, where he talks about how the real estate sector is likely to have played a key role in the private capex growth story, using housing loans data as a proxy. Corporate capex has been picking up too and my colleague Dinesh Unnikrishnan had pointed out expectations of a substantial jump in private capex alluded to in an article published in the RBI bulletin. The Q1 data certainly lend support to that expectation.

A private consumption revival that gives confidence to the private sector to start investing in capacity additions, going beyond the infrastructure investments that have been dominating capital investments, is what the doctor ordered for the economy. The government has been cajoling the private sector to shed its inhibitions and invest. The timing is also good as the government is moving gears to focus more on fiscal consolidation and ease up on the investment front, and the private sector stepping up can give it the space required to do so without hurting the economy.

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A recovery in private investments can create a virtuous cycle of growth that will give a fresh impetus to the manufacturing sector, create more supply of goods that should help meet demand without leading to inflationary trends, and also create demand for capital and labour. The second order benefits of private sector investment will be felt by a number of sectors and more importantly, create more opportunities for investors.

Before we leave you to parse today’s MC Pro offering, also take a look at this article that explains the structural changes taking place in the economy as seen from GVA data and another one by Gaurav Kapur, chief economist at IndusInd Bank, on the improved outlook for GDP growth in FY25. Of course, there are risks as well, as he pointed out, “Risks to growth from spillovers from adverse global economic, market and geo-political developments, can put pressure on domestic activity. Enhanced external sector buffers and overall macro-economic stability should help counter them and reduce the impact of volatility in capital flows and commodity prices on domestic growth. Otherwise, with major large economies, especially the US, anticipating a soft landing on the growth front, global trade and external demand growth may not see significant disruptions. Thus, growth is poised to pick up over the rest of the year and full year growth around 7 percent in FY204-25 remains likely.”

Investing insights from our research team

Gala Precision Engineering IPO: Is this precision parts maker worth your attention?

Tracker

Monsoon Watch: India is likely to experience an extended monsoon season

What else are we reading? 

SEBI's new eligibility criteria for the derivative segment will reduce market manipulation

Chart of the Day: Is China’s steel output decline the answer to the Indian steel producers’ woes?

The Eastern Window: The government needs to tread a fine line on Chinese investments

How power sector revival altered plans of CESC, Adani Power

How to plug the target-reality gap in manufacturing march?

EU plan for buying key commodities centrally is over-reach, warn tech groups (republished from the FT)

Prime Minister’s Jan Dhan Yojana: The long arc of financial inclusion in India

Australia enacts right to disconnect; why implementing it in India may be challenging

Personal Finance

The NFO deluge: At Rs 65,000 crore collections so far in 2024, new offers surpass 2023 tally

Markets 

SEBI probes into insider trading, front running matters jump in FY24

Technical Picks: IDFC, Steel Authority of India, Prestige Estates Projects (These are published every trading day before markets open and can be read on the app).

Ravi Ananthanarayanan
Moneycontrol Pro