CURRENT ACCOUNT DEFICIT
$2.4 trillion worth of gold! India's household hoard is 6x Pakistan's economy
Indian households hold an estimated 25,000 tonnes of gold worth $2.4 trillion—nearly six times Pakistan’s GDP and greater than Italy’s economy. Despite monetisation challenges, high prices and strong demand keep gold central to Indian wealth. UBS projects stable demand and rising prices, boosting savings and gold-backed lending.
Expecting a flush of money in India; 6 sectors to invest in over next 4-5 years: Sandip Agarwal
Fund Manager Sandip Agarwal anticipates significant financial growth in India, driven by positive economic indicators and a surge in private capex. He highlights attractive investment opportunities in sectors like water, chemicals, cement, banks, and power over the next four to five years. Agarwal also notes a shift towards luxury consumption due to rising per capita income.
Despite threats, Iran never closed Strait of Hormuz; oil mkt well-supplied: Analysts
Despite Iran's repeated threats to close the Strait of Hormuz, a vital waterway for global oil and gas transit, it has never followed through due to strategic and economic costs. Analysts believe the oil markets are well-supplied, with OPEC's spare capacity and rising US shale production providing a buffer.
Rupee hits 3-month low on worries over US role in Middle East conflict
The Indian rupee weakened to its lowest level since mid-March amid heightened risk aversion in financial markets, fueled by concerns over potential U.S. involvement in the Israel-Iran conflict. Rising Brent crude oil prices, nearing $77 per barrel, further pressured the rupee, given India's reliance on oil imports.
ICRA forecasts small dip in GDP growth at 6.2 per cent in 2025-26
ICRA projects India's real GDP growth to exceed 6.5% and GVA growth to surpass 6.3% for FY26. CPI inflation is expected above 4.2%, with a fiscal deficit of 4.4% of GDP. Rural demand will likely remain strong, supported by Rabi cash flows, while services exports are expected to outpace merchandise exports.
Is the Indian bond market overreacting to Monetary Policy changes? B Prasanna answers
Following the RBI's surprising policy shift, the bond market is adjusting to a new equilibrium. Experts anticipate a settling of interest rates, influenced by falling inflation and potential US rate cuts, with a terminal repo rate possibly targeting 5.25%. Investors may favor shorter-duration bonds, while long-end bonds might underperform due to the steepening yield curve and narrow interest rate differentials.
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How a wider Iran-Israel conflict can threaten India
Israel, Iran conflict: Recent attacks between Israel and Iran have heightened fears of a larger regional conflict. India is closely monitoring the situation for potential economic repercussions. Rising crude oil prices and trade disruptions are major concerns. The Indian government is urged to diversify energy sources and maintain strategic oil reserves. Several sectors, including aviation, paints, and pharmaceuticals, could face challenges.
F&O Talk | Indian markets slip but show resilience even as global geopolitical risks mount: Rahul Ghose
Indian benchmark indices Sensex and Nifty50 closed lower on Friday, mirroring sharp declines across Asian markets as Israel’s military strikes on Iran intensified geopolitical tensions in the oil-sensitive Middle East.
Can rupee recover from its worst fall in over a month due to rising oil prices?
The Indian rupee weakened to 86.20 per dollar due to rising crude oil prices following Israeli strikes on Iran, but closed at 86.08/$1 after likely RBI intervention. Brent crude surged to $75 per barrel, impacting risk sentiment and pushing the 10-year bond yield to 6.40% before settling at 6.36%. Geopolitical tensions created a fragile mood for bonds.
Iran-Israel Conflict: A Middle East flashpoint that Indian economy can’t ignore
Israel-Iran Conflict: India's economy faces challenges in 2025. The Israel-Iran war has pushed global crude oil prices higher. This threatens the rupee and could raise inflation. India, a major crude oil importer, is highly vulnerable to rising oil prices -- it could widen the current account deficit. The Reserve Bank of India may postpone rate cuts. The government might consider cutting excise duties on fuel.
Rupee slides on Israel-Iran conflict; central bank likely intervenes
The Indian rupee experienced its worst day in over a month, plummeting 0.6% to 86.08 per dollar following Israeli strikes on Iranian sites, which heightened risk aversion. The Reserve Bank of India intervened to curb losses as the rupee hit a two-month low.
ETMarkets Smart Talk | India could attract $1.5 trillion FII inflows over the next decade: Swati Khemani
Swati Khemani of Carnelian Asset Management remains optimistic about Indian equities, citing strong macro fundamentals and potential FII inflows of $1.5 trillion. She anticipates gradual rate cuts by the RBI and favors sectors like BFSI, manufacturing, pharma, and specialty chemicals.
Modi 3.0 has got inflation & growth right but jobs, land reforms are still a challenge
Narendra Modi government completes 11 years with strong economic growth. Inflation is under control and forex reserves are ample. However, job creation and private investment remain concerns. Experts say land and labor reforms are crucial. Political stability may help revisit reforms. Free trade agreements could pose challenges without reforms. The government needs to address these issues.
Will RBI's rate cuts and liquidity easing be enough to spur demand and grow India's economy?
Despite the RBI's significant liquidity injection through rate and CRR cuts, a Nuvama report questions its effectiveness in reviving demand due to fiscal constraints and subdued corporate investment. The report highlights that households' limited capacity and neutral fiscal policy hinder a robust recovery, unlike previous cycles supported by fiscal expansion and export rebounds.
Extreme poverty in India down to 5.3% in 2022-23: World Bank
India witnessed a significant decline in extreme poverty, dropping from 27.1% in 2011-12 to 5.3% recently, even with the World Bank's revised poverty line of USD 3 per day. This reduction was supported by free and subsidized food transfers, narrowing the rural-urban poverty gap.
India continues to remain an attractive investment destination, says RBI governor
India attracts significant foreign investment. Gross FDI inflows increased to $81 billion in FY2024-25. Net FDI moderated, signaling a maturing economy. ECBs and non-resident deposits also saw higher inflows. Despite FPI outflows, India's external buffers remain strong with substantial foreign exchange reserves. The current account deficit is contained.
Rise in repatriation reflects market maturity, says RBI Governor amid dip in net FDI
India is still a good place for foreign companies to invest. More companies are sending their profits back home, which shows the market is working well. Foreign investment went up this financial year. The Reserve Bank of India expects the country's financial situation to remain stable. The foreign exchange reserves are sufficient.
Russia Ukraine war: Big setback for Volodymyr Zelenskyy after drone attack success, major economic crisis set to worsen
Russia Ukraine war is now taking toll on the export bill of Kyiv. EU temporarily waived duties and quotas on Ukrainian exports after Russia's full-scale invasion in February 2022.
Reserve Bank-led MPC may deliver third straight rate cut as inflation undershoots
Reserve Bank of India is likely to cut rates for the third time. This is to boost economic growth, given muted inflation. Most economists expect a 25-basis point cut in the repo rate. Retail inflation has slowed down. India's GDP grew faster than expected in the March quarter. The central bank may widen the policy rate corridor.
ETMarkets Smart Talk | Dollar strength, geopolitics & yields – the triple threat roiling Indian markets: Anirudh Garg
Amid market volatility fueled by global factors like dollar strength and geopolitical tensions, Anirudh Garg of INVasset PMS offers insights on navigating Dalal Street. He suggests tactical portfolio shifts, highlighting opportunities in sectors like textiles, financials, and defence. Garg emphasizes a data-driven approach to managing risk and uncovering long-term value in a dynamic market.
US yields are America’s headache, but DXY may be world’s concern: Kotak Equities
Kotak Institutional Equities suggests rising US bond yields reflect domestic fiscal concerns rather than growth optimism. A weakening US dollar, however, poses broader global risks, potentially reshaping investment strategies and capital flows. While US yields may be a localized issue, a declining dollar index could trigger asset repricing and influence financial stability worldwide, but India seems insulated.
India crowned top destination for stock compounders, says BofA; lists 9 structural themes
According to the International Monetary Fund, India is projected to be the fastest-growing major economy in 2025 and 2026. Over the past 30 years, Indian markets have delivered USD-based returns at a 7% CAGR, second only to the U.S. Notably, this performance has been driven primarily by earnings growth rather than valuation increases, distinguishing India on the global stage.
What’s the difference between fiscal deficit, trade deficit and CAD?
If you are confused by personal finance terms, jargon, and calculations, here’s a series to simplify and deconstruct these for you. In the 53rd part of this series, we explain the difference between the fiscal, trade, and current account deficits of a country.
Bulls & bears played tug of war in June over last 10 years. Should you stay put or take a vacation?
Nifty saw its best June performance in 2020 during the COVID-19 lockdown, rising 7.5%. In comparison, the index delivered strong returns of 6.6% in 2024 and 3.5% in 2023.
Will small and midcaps correct more than largecaps this time? Anand Tandon answers
Independent Analyst, Anand Tandon, views Dalal Street mood as reasonably buoyant. Market valuations are high, similar to September '24 levels. He anticipates potential tariff impacts, urging India to enhance manufacturing competitiveness. Focus areas include railways and defence. Tandon suggests textiles and defence exports hold promise. He emphasizes shifting from subsidy-driven models to cost-effective manufacturing.
‘On rates, it’s status quo or cuts; concerned about banks’ mis-selling of insurance’: RBI governor Sanjay Malhotra
RBI Governor Sanjay Malhotra emphasizes India's economic resilience and commitment to managing rupee volatility without targeting specific rates. He highlights the importance of real interest rates for depositors and the central bank's focus on customer protection and cybersecurity. The governor also addresses concerns about UPI concentration and governance lapses in banks.
Trump's tax on remittances won't have big impact on Indian economy
The proposed US 5% tax on remittances is unlikely to significantly impact the Indian economy, though it may strain the diaspora and weaken the Rupee slightly. Experts suggest the actual effect depends on the tax's fine print and potential offsets, with possible adjustments in remittance behavior and fintech innovations to mitigate costs.
Fund Manager Talk | Defence stocks rally shows FOMO taking over rationality, says Kotak's Atul Bhole
India’s macro fundamentals are in a really sweet spot & proving to be one of the strongest versus major global economies. Tightly controlled fiscal & current account deficits, lower inflation & stable currency while maintaining growth handle around 6-6.5% are attracting back foreign flows in a major way.
India's export outlook remains uncertain, trade deficit to widen to 1.2% of GDP in FY26: UBI Report
Union Bank of India's report indicates India's trade outlook faces uncertainty due to potential US reciprocal tariffs, projecting a wider current account deficit of 1.2% of GDP in FY26. April 2025 saw a significant widening of the merchandise trade deficit, driven by increased imports and a surge in the non-oil non-gold trade deficit, despite a strong services trade surplus.
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