Ashika Monthly Insight August 2016

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AUGUST <strong>2016</strong> ECONOMIC REVIEW Projected sectoral GNPAs under various scenarios (per cent of advances of their respective sector) Thus, clearly while the process has been initiated and the banks are in the process of much needed clean up of the balance sheets. The corporate from the stressed sectors like iron & steel, engineering has often been victim of muted demand and excess capacities thus unable to service interest payments. Thus, although the FSR highlights that the corporate de-leveraging has indeed begun and the final assessment states that even though the banking sector is going through difficult phase, the Indian financial sector remains stable. The newly introduced sustainable structuring of stressed assets (S4A) scheme expects to address the issues with the stressed players particularly in the iron & steel sector. However, the success will also be dependent on the outlook of the industry apart from the will and management efficiency. In the face of global challenges plaguing India’s growth story, continuation of sound domestic policies and structural reforms remain the key for macroeconomic stability. Needless to say that the banking sector, especially public sector banks which account for 70% of the overall banking in the country needs to be dealt with more seriousness from the government. Although, the implementation of bankruptcy code will take time, nevertheless it is a beginning and a step in the right decision. However, for the time being the government needs to continue boosting the investment climate by committing higher public capex since private capex still needs time to pick up. Indeed, this is jeopardy for the government to allocate the crucial budgetary funds given the implementation of Seventh Pay commission. The only concern is that with the exit of Mr. Rajan, the sole proponent of AQR, the whole cleaning process might again slow down and we might again fall back to the erstwhile practices of accumulation of bad loans and is a major setback. The onus thus rests with successor of Rajan as well as with the government to continue with the banking reform process since there is a considerable amount of expenses involved in the exercise. According to the media reports, Moody’s Investors Service have highlighted in a note (dated 10 June <strong>2016</strong>) that the government will have to infuse Rs 1.2 lakh crore into state-run banks by 2020 to bolster their balance sheets and make good the losses suffered by them. This is way higher than an additional Rs 45,000 crore capital infusion plan envisaged by the government and is thus a major challenge ahead. 38
STRONG ON CONSUMPTION ECONOMY CHART BOOK Monetary Policy Rates 10 9 8 7 6 5 4 3 2 1 0 Repo & Rev.Repo (%) Repo Rate (%) Reverse Repo Rate (%) 28 23 18 13 8 3 Statutory Liquidity Ratio (%) 27-Apr-01 05-Mar-02 30-Oct-02 07-Mar-03 31-Mar-04 26-Oct-05 25-Jul-06 30-Mar-07 30-Jul-08 08-Dec-08 21-Apr-09 02-Jul-10 02-Nov-10 03-May-11 16-Sep-11 29-Jan-13 20-Sep-13 15-Jan-15 29-Sep-15 10 9 8 7 6 5 4 3 Cash Reserve Ratio (CRR) (%) 08-Apr-00 29-Jul-00 24-Feb-01 19-May-01 29-Dec-01 16-Nov-02 18-Sep-04 23-Dec-06 17-Feb-07 14-Apr-07 04-Aug-07 26-Apr-08 24-May-08 19-Jul-08 11-Oct-08 08-Nov-08 13-Feb-10 24-Apr-10 10-Mar-12 03-Nov-12 11 10 9 8 7 6 5 4 3 Bank Rate (%) 02-Apr-00 22-Jul-00 17-Feb-01 02-Mar-01 23-Oct-01 29-Oct-02 29-Apr-03 13-Feb-12 17-Apr-12 29-Jan-13 19-Mar-13 03-May-13 15-Jul-13 20-Sep-13 07-Oct-13 29-Oct-13 28-Jan-14 15-Jan-15 04-Mar-15 02-Jun-15 29-Sep-15 05-Apr-16 25-Oct-97 08-Nov-08 07-Nov-09 18-Dec-10 11-Aug-12 14-Jun-14 09-Aug-14 07-Feb-15 02-Apr-16 11 10 9 8 7 6 5 4 3 Marginal Standing Facility (%) 03-May-11 16-Jun-11 26-Jul-11 16-Sep-11 25-Oct-11 17-Apr-12 29-Jan-13 19-Mar-13 03-May-13 15-Jul-13 20-Sep-13 07-Oct-13 29-Oct-13 28-Jan-14 15-Jan-15 04-Mar-15 02-Jun-15 29-Sep-15 05-Apr-16 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% SBI Base Rate (%) 01-Jul-10 21-Oct-10 03-Jan-11 14-Feb-11 25-Apr-11 12-May-11 11-Jul-11 13-Aug-11 20-Sep-12 19-Sep-13 19-Sep-13 07-Nov-13 10-Apr-15 08-Jun-15 05-Oct-15 39
Page 1 and 2: August, 2016 Market Overview Monthl
Page 3 and 4: STRONG ON CONSUMPTION Strong influx
Page 5 and 6: STRONG ON CONSUMPTION rural develop
Page 7 and 8: STRONG ON CONSUMPTION Over the year
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Page 21 and 22: STRONG ON CONSUMPTION FY17 FY18 FY1
Page 23 and 24: STRONG ON CONSUMPTION DISCRETIONARY
Page 25 and 26: STRONG ON CONSUMPTION Source: Motil
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Page 31 and 32: STRONG ON CONSUMPTION Cloud service
Page 33 and 34: STRONG ON CONSUMPTION Infosys 24.3
Page 35 and 36: STRONG ON CONSUMPTION NNPAs of SCBs
Page 37 and 38: STRONG ON CONSUMPTION Asset quality
Page 39: STRONG ON CONSUMPTION Macroeconomic
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Page 53 and 54: STRONG ON CONSUMPTION Ashika Genera
Page 55 and 56: STRONG ON CONSUMPTION Key takeaways
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Page 59 and 60: STRONG ON CONSUMPTION 10 Year Bond
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Page 67 and 68: STRONG ON CONSUMPTION Research Team

Ashika Monthly Insight August 2016

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