After the World Bank, global rating agency Fitch on Thursday projected India’s economic growth for next year to be 7.3 per cent and further to 7.5 per cent in 2019-20.
But for the current fiscal that ends 31 March, its growth outlook is 6.5 per cent which is lower that the Central Statistics Office’s 6.6 per cent.
In the global economic outlook report , the US-located agency says the pick-up in growth is likely as the influence of one-off policy related factor which was dragging growth has waned.
The money supply recovered to its pre-demonetisation level in mid-2017 and is now increasing steadily similar to previous trend.
Also, disruptions related to rollout of the Goods and Services Tax or GST in July 2017 are showing signs of recovery. The economy hit five-quarter high of 7.2 per cent in Q3 ( October-December) on good show in key sectors such as agriculture, construction and manufacturing.
The encouraging reports of the World Bank and Fitch, however, failed to enthuse the market which continued to drag further down amid lacklustre trade with downside bias.
The 30-scrip Sensitive Index of Bombay Stock Exchange and 50-scrip Nifty of National Stock Exchange again eluded any recovery as traders kept booking profit in bigwigs such as Reliance Industry and ICICI Bank.
The volatility continued to edge down indices across Asia-Pacific in tandem with overnight fall in Wall Street market which was down for the third straight session after President Donald Trump insisted on imposing harsh trade /tariff restrictions on China that may break out in a trade war.
The Morgan Stanley Composite Index (outside Japan) for Asia-Pacific was down 0.45 per cent. Sensex closed 33,685.54 (-150.20) points losing 0.44 per cent.
Nifty was down 0.49 per cent at 10,360.15 (-50.75) points. Bank shares were under stress like their assets, say analysts, following Reserve Bank of India’s action to scrap letters of undertaking or LoUs with immediate effect.
Banks lost ground irrespective of RBI’s clarification that the banks would continue to extend capital to businesses but in a transparent way.
Nifty Bank failed to recover like on Wednesday as it closed 24,791.85(-59.80)points down 0.24 per cent for the day. Nifty PSU Bank lost 0.73 per cent at 2,940 (-21.75)points.
Analysts say 2018 is unlikely to match returns to investors of 2017 which ended on a dream lucrative run giving bountiful returns to retail investors.
The markets are likely to be volatile in the near-term as foreign and domestic funds appear busy reshuffling allocations to various sectors. Recently there has again been a spurt in buying mid-cap shares of the companies that are displaying much transparency in their earnings data.
This has led to increase in mid-cap indices while equity benchmarks such as Sensex and Nifty reel under selling pressure.
Analysts say reallocation of investment funds was necessary for fund managers who are struggling to retain retail or household investors interest in equity market.
In the Sensex seven shares advanced and 24 declined. For Nifty it was 13:27. gainers in BSE benchmark included Asian Paints `1,161.85, 2.22 per cent; and MnM Rs 733.60, 0.67 per cent. Among losers were Yes Bank `312.20, -2.10 per cent; RIL `912, -1.79 per cent; and ICICI Bank `301, -1.75 per cent.