Making Sense

Last week, India PMI release showed robust economic activity with input cost receding to 40 month lows . Markets also received the advance estimates of National Income for FY 2023 - 24.  The first advance estimates of Nominal GDP peg GDP at 296.58 Lac crores, lower than budgeted estimates of 302.85 Lac Crores. The Nominal GDP is estimated to grow at 8.90% as against budgeted estimates of 10.2%. The revision lower in Nominal GDP could entail either a 12 bps increase in Fiscal Deficit or a 37K cr reduction in fiscal deficit to retain a 5.90% Fiscal Deficit target.  Budget Estimates 2023 - 24 Fiscal Deficit in INR crs          17,86,816 Fiscal Deficit as % of GDP 5.90% GDP (in INR crs)       3,02,85,017     First Advance Estimates   ...

 You can find the link to the previous numbers here  Trade deficit for the month of April 2023 came in at $ 15.24 bn  much lower at than consensus expectations of $ 19.50 bn. Services sector performance continues to be robust with services surplus at $ 13.38 bn.  April Merchandise exports $ 34.66 bn ( -10% mom) & Services Exports $ 30.36 bn ( +9% mom) Exports were driven by sharp rise in oil meals , electronic goods and rice while gems and jewellery, jute, textiles etc showed sharp contraction.  April Merchandise Imports $ 49.99 bn (-14% mom) & Services Imports $ 16.50 bn ( +17% mom) Import contraction was driven by sharp fall in fertilisers, gold and vegetable oil while pulses, machinery, electrical goods rose. Overall Trade deficit came in sharply lower at $ 1.38 bn. If the services sector continues to show robust performance like has been the trend over the last year with per month trade deficit averaging $ 2 bn and Income plus transfers averagin...

  "The only limit to our realization of tomorrow will be our doubts of today." Yesterday, US released the Advance Retail Sales data. Adv Retail Sales and Food Services Data fell 0.40% mom against consensus estimates of a 0.30% contraction and following a revised 3.20% in the month of January 2023. Compared to Dec 22, Retail Sales are up 2.81%. The data offers limited insight. US also released the PPI data which fell 0.10% mom against consensus estimates of a rise of 0.30% following a downward revision to the Jan number to 0.30% rise from earlier reported 0.70% rise. This is seen as a welcome moderation in the data. Overnight we saw the market deeply concerned about the contagion risk moving to European Banks. European Banking index was down 8.40% with concerns centred around Credit Suisse. Later, during the day, FINMA and SNB issued a statement expressing comfort on the Credit Suisse capital and liquidity metrics. SNB offered a $ 54 bn covered loan facility to the bank. At th...

 The Jan ADP report released yesterday showed solid Job gains and elevated wage growth.Private sector employment increased by 242,000 jobs in February and annual pay was up 7.2% yoy. Job losses were seen in the Construction sector (-16K) and professional / business services (-36K) while solid gains were seen in leisure (+83K) / hospitality followed by financial services (+62K) and manufacturing (+43K). The Jan trade deficit widened to $68.3 billion as imports increased $9.6 billion over December imports and exports increased $8.5 billion over the prior month. The data shows expansion of global trade activity. The Job Openings and Labor Turnover Summary (JOLTS) showed a decrease in job openings to 10.8 million following a revised 11.234 million in December. The number shows employers are still struggling to fill vacancies. USD index continued to hold onto gains. The yield on the 2Y UST increased to a high of 5.085% while the 10Y touched a high of 3.995%. Markets continued to push th...

 India released the Merchandise + Services Trade data on 15th Feb 2023.  The trade data showed a welcome moderation. The merchandise trade deficit came in at $ 17.75 bn, lowest since Jan 2022 and the services surplus posted a record surplus of $ 16.48 bn. Overall trade balance recorded a net outflow of $ 1.27 bn.  It appears the worst is behind and the services sector outperformance has helped bridge the merchandise trade gap. On a FYTD basis, we are running a Merchandise + Services Trade deficit of $ 112 bn. Broad USD strength on the back of strong NFP print / CPI print and Retail Sales data (released today showed headline Retail Sales rose 3% mom following a 1.10% mom contraction in dec) is likely to weigh on the INR.  Positive surprise on trade data and stable FPI flows so far in Feb along side INR at the top of the support zone of 83.00 have me biased to short USDINR with stops above 83.20. But I'd wait for the USD to turn before establishing any meaningful short...

“Time is your friend; impulse is your enemy.” - John Bogle India released the trade deficit data.  December merchandise trade deficit came in at $ 23.76 bn (prev month $ 23.89 bn) with mom exports growing at 8% , current $ 34.48 bn, prev month $ 31.99 bn and mom inports growing 4% , current month $ 58.24 bn , prev month $ 55.88 bn. On the services side , exports rose 4% mom to $ 27.34 bn while imports rose 16% mom to $ 15.56 bn. Dec services exports and imports held steady above the Apr - Dec 2022 mean of $ 26 bn and $ 15 bn.  On the aggregate, trade deficit ( merchandise + services ) stands at $ 118 bn which is a significant deterioration from the deficit of $ 57.26 bn for the corresponding period in 2021. The transfers and income surplus for H1 22 - 23 stood at $ 26 bn, extrapolating the same, transfer and income surplus is estimated at $ 13 bn. Q3 merchandise trade deficit is est at $ 74.5 bn while services surplus is est at $ 36.85 bn. Invisibles (services + income + tr...

Let's quickly run through some of the things I picked up over the last week Release of H2 Balance of Payment data 1. India reported a BoP deficit of $ 30.38 bn for Q2 ( $ 4.6 bn surplus for Q1). H1 BoP is at $ 25.78 bn.  Current account = Merchandise + Invisibles ( Services + Transfers + Income)                                 = - 147              + 92             ( 65          + 48            - 21         )                                 = - 55 bn $  Capital Account = Foreign Investment + Loans + Banking Capital + Rupee Debt Service + Other Capital                        ...

  "Believe. Think. Visualize" India trade deficit* in November improved to $ 24 bn on a 7% mom growth in merchandise exports to $ 32 bn and de-growth of 1% in mom imports to $ 56 bn. Electronic exports rose sharply while textiles, chemicals and other categories showed contraction. The table below shows Apr - Nov actuals and projected numbers for the FY. This will be the largest current account deficit posted by India.  For Dec - Mar numbers, exports are assumed at $ 30 bn. If the global recession fears materialize on aggressive tightening by Central Banks, the extent of demand destruction in the export basket will need to be closely watched especially since the Indian currency continues to be overvalued. The trade weighed REER index eased from 103.06 to 101.62 in Oct. Assuming a 10% destruction in exports, the export number for balance of the year is estimated at $ 108 bn. On the import side, $ 55 bn of imports per month is assumed. Savings of $ 1 - $1.2 bn are likely to accr...

 India Oct trade deficit data came in at $ 26.91 bn. FY 22 - 23 till Oct came in at $ 183 bn.  Exports peaked in the first quarter of FY 22 - 23 and have steadily declined in line with a subdued global outlook. Exports contracted 9% mom to $ 29.78 bn while imports contracted 4% to $ 56.69 bn. Fall in exports was largely driven by  cotton yarn/handloom, gems and jewellery exports, and engineering goods. The Oct estimated services surplus came in at $ 12.28 bn and trade balance therefore stands at $ 14.63 bn. 

 India recorded BoP surplus of $ 4.5 bn for Q1 22-23. Current account deficit came in at $ 23.90 bn and capital account recorded a surplus of $ 28 bn explained by short term credit of $ 8.7 bn and $ 19 bn in bank capital. 1.        Merchandise     -68.50 As    Monthly trade deficit for first 5 months is usd 129 bn and for the balance of the year estimated deficit is usd 25 bn pm , then yearly number is likely at usd 300 - 305 bn. 2.        Invisibles           44.66 ( Services        31.71;  Transfers     22.85;  Income        -9.26)       The year end number is estimated at usd 160 bn wherein services surplus could average usd 30 bn pm ( usd 120 bn surplus); transfers at usd 80 bn and income outflow at usd 40 bn. I      Current Ac...