Global Economic Scenario
In the first quarter, the US economy grew well above market expectations, driven once again by strong gains in the private economy. At this writing, consensus estimates of first-quarter real GDP stand at about 3.0% to 3.5% annualized, or more than 1% higher than consensus estimates at the beginning of the year The U.S. looks positioned to maintain its slow but steady growth trajectory. Thanks to an upward revision in fourth quarter GDP growth, the U.S. has tallied 14 consecutive quarters of economic expansion, and the ECRI Index continues to move in the right direction. Many of the dislocations resulting from the 2008 financial crisis have abated. The recovery in housing has broadened.
Domestic Economic Scenario
Oil and Gold together account for a 43% share of India’s gross imports as of FY12. Since the start of April 2013, global crude oil (Brent) and gold prices (in dollar terms) have fallen by about 10% and 14% respectively. The key question is whether these prices will sustain at the current lower levels. Our view is if the falls of lower oil and gold prices continues it could bode well for India’s macro outlook and will help to reduce the macro stability risks.
Perspective on Markets
FII’s have pumped in a staggering Rs 2,600 crore ($ 483 million) in the Indian stock market during the first two trading sessions of the month amid political and economic worries. With this, the total foreign investor investments in the country's equity market has reached Rs 63,643 crore ($ 11.8 billion) since the beginning of 2013. Market experts said FII inflows in the Indian equities slowed last month because of a slew of factors such as profit- booking, concerns over high current account deficit (CAD) and political uncertainty. FIIs had infused Rs 5,414 crore (about $ 1 billion) in the Indian equity market in April, the lowest in 16-months.