After opening the day on a flat note, share markets in India have remained range bound and are trading marginally below the dotted line. Sectoral indices are trading on a mixed note with stocks in the consumer durables sector and stocks in the power sector leading the gains, while stocks in the metal sector are trading in red.
The BSE Sensex is trading down by 68 points (down 0.2%), and the NSE Nifty is trading down by 23 points (down 0.3%). Meanwhile, the BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading flat. The rupee is trading at 66.64 to the US$.
In news about the economy. Global rating agency Fitch, in a report said the Indian economy will grow by 7.1% in the current fiscal before stepping up to 7.7% in the next two financial years.
The US-based agency, however, termed the 7% GDP growth for the October-December quarter as “surprising”, a tad lower than 7.4% in the previous quarter.
According to the report, the GDP growth number is surprising as real activity data released since notebandi pointed to weak consumption and services activity because these transactions are cash-intensive. By contrast, official data suggest that private consumption was strong in the fourth quarter of 2016, although services output growth moderated quite substantially.
Fitch expects Indian GDP to grow by 7.1 per cent for 2016-17, before picking up to 7.7 per cent in both 2017-18 and 2018-19. It said the December quarter GDP number suggests that economic activity was “hardly hit” by the cash crunch after the government’s move to remove 86% of currency in circulation overnight.
On this discrepancy, Fitch said it could be the inability of official data to capture the negative effects of notebandi on the informal sector.
According to data released by the government’s Central Statistics Office (CSO) India’s Gross Domestic Product (GDP) grew at a rate of 7% in the December quarter, despite effects of notebandi in November 2016.The Q3 numbers meant that India kept its place as the fastest growing large economy in the world.
