Investors in Indian equities will start this week’s trading session with slew of negative macro-economic data.
To begin with, post-market hours on Friday, India’s Gross Domestic Product (GDP) print for the June quarter was released. At 5%, GDP growth was much below the expected 5.7% and at a multi-year low. Of course, consolidation of 10 public sector banks was also the highlight of that evening. But the jury is still out on the repercussions and economic benefits of this move.
The good and services tax (GST) collections for August, announced on Sunday, slipped to ₹98, 202 crore. Although the collection is higher by 4.51% on a year-on-year basis, it is still lower than government's expectations of ₹1 trillion. According to tax experts, compliance may have improved compared to the previous year but this dip in revenues can be linked to the general slowdown in the industry.
Another data point that continues to paint a grim picture of the India’s consumer sentiment is automobile sales data. India’s largest carmaker, Maruti Suzuki Ltd’s sales fell by 32.7% to 106,413 units in August this year. This is the worst decline for the company ever. Tata Motors Ltd too reported a 58% decline in its domestic passenger vehicle sales at 7,316 units in August. Mahindra & Mahindra and Honda Cars India also witnessed a decline in sales.
Further, the Purchase Managers’ Index (PMI) survey for India’s manufacturing sector for the month of August was published on Monday. The headline figure slipped to a 15-month low of 51.4 as business activity was impacted by weak demand and increased cost pressures. It should be noted that the Indian stock market was closed on Monday on account of Ganesh Chaturthi festival.
Although the first trading session of September Futures & Options series began on a positive note, technical analysts note that lower number of rollovers indicate weak investors’ sentiment, which could be further dampened by disappointing data.
Meanwhile, foreign institutional investors (FIIs) have sold Indian stocks worth $2.19 billion in August, their biggest sell-off in 10 months since October 2018. Equity analysts caution of an increased risk of outflows if the government fails to take measures quickly to revive the ongoing economic slowdown.