Economic slowdown, credibility of fiscal deficit number; all this and more on Moneycontrol Pro

Finally, some great news! India’s fastest-growing financial subscriptions service, Moneycontrol Pro, is available both on the website and mobile apps. Moneycontrol Pro offers curated markets data, independent equity analysis, insights into investment styles and exclusive trading recommendations. In sum, all the information you need for wealth creation. The slowdown as analysed by the Reserve Bank of India The central bank has retained the 6.9 percent target for Gross Domestic Product (GDP) growth this fiscal as seen in the August monetary policy statement. It, has, however, tried to address the key question on the nature of the economic slowdown. It said that the diagnosis is difficult and the conditions are hard to disentangle. All the three engines of the economy — consumption demand, investment demand and external demand — are sputtering. Nonetheless, the central bank concluded that the recent deceleration in the economy is in the “nature of a soft patch mutating into a cyclical downswing, rather than a deep structural slowdown.” But what is leading to this? Click here to read more. [caption id=“attachment_6847201” align=“alignleft” width=“380”] Representational image[/caption] The credibility of the fiscal deficit number is declining by the day In recent times the government’s delay in transferring the subsidy due to the Food Corporation of India (FCI) has been cited as an example of the Centre keeping its expenditure low in the current year. Moreover, the government is also delaying the transfer of budgetary assistance to the railway for its investment programme, leaving it to Indian Railway Finance Corporation (IRFC) to raise resources. All this has created a perception among economists that the market’s focus on the fiscal deficit figure is misplaced as it can be played around with so easily. Instead, the focus should be on the overall public sector borrowing requirement (for the government plus public sector enterprises) which gives a far better picture. Click here to read more. Food for thought | Why the FCI’s health is failing rapidly The FCI is dishing up some unpalatable food for thought. The country’s granary is bursting at the seams with a stock that is way above the buffer norm requirement set for the corporation. While preserving food grain is itself a headache, the bigger worry is the rising cost of maintaining such a huge stock. Why is this important? The steep hikes in minimum support prices and lower realisation from sales of grains by FCI have pushed up the Centre’s food subsidy bill over the years. Moreover, the Centre is likely to have underpaid the food subsidy bill to the FCI by around Rs 2 lakh crore for 2018-19. Click here to read more. This vendor to FMCG companies demands investor attention There is a slowdown in the domestic packaged consumer goods sector. But a niche company that supplies ingredients to fast-moving consumer goods (FMCG) companies demands attention as its earnings improve. SH Kelkar posted a strong set of numbers in the June 2019 quarter. Business dynamics have improved as uncertainty on raw material supply has abated and new facilities are operating near optimum utilisation levels. This has to be weighed against two key risks: raw material inflation and global competition. The company has a large inventory of 150-180 days’ worth of raw materials. This makes it vulnerable to volatility in raw material prices. What should investors do? Click here to read. KEI Industries: Is it a name worth considering? KEI Industries makes cables and also runs an EPC (engineering, procurement and construction) business. Even in difficult market conditions, KEI Industries has been growing at a fast pace. In the past two quarters, it has recorded 22 percent year-on-year (YoY) growth in sales while profits have grown by an average of 32 percent. This strong growth momentum is expected to continue in coming years because of a strong order book, expansion in its capacity and increasing reach, particularly in retail and overseas markets. But there are increasing risks as well. Should investors then buy this stock? Click here to read our analyst’s take. Picks from our technical analysts 1. Ujjivan Financial Services: This stock has found strong support near Rs 250-260 levels. Click here to know how to trade Ujjivan futures. 2. Infosys: The markets are weak and money is moving to defensive sectors like IT along with falling INR. But Infosys is trading at close to its highest levels. What positions should traders take? Click here to read. Independence Day Offer: Pay Rs 289 for 3 months and get Moneycontrol Pro for 1 year. Use code “FREEDOM” For more information, check out the Moneycontrol website or mobile app.