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India's current account deficit for the quarter ended March 2011 narrowed to 1.1% of GDP
from 3.1% of GDP a year earlier and 2.1% in the prior quarter. The improvement primarily
reflected a lower trade deficit.
Lower trade deficit drove the decline in the current account deficit
The trade deficit declined to 6.1% of GDP (US$30bn) in the March quarter from 7.7% a year
earlier and 6.8% in the prior quarter as exports climbed 47% yoy to US$77bn, while imports
rose 27% yoy to US$107bn. The current account deficit of US$5.4bn for the March quarter
was only slightly below the Bloomberg consensus estimate of US$6.0bn.
RBI’s trade deficit data seem to take into account the ’right‘ oil imports
Per RBI’s balance of payments (BOP) data, the absolute amount of the trade deficit for the
March quarter declined only 5% yoy from US$32bn. However, trade data released by
DGCI&S suggested a 26% yoy decline because of a lower increase in imports. We had
suspected the DGCI&S data was understating oil imports. The RBI’s BOP release states that
the DGCI&S is likely to upwardly revise its import numbers as the RBI’s imports estimate of
US$381bn for FY11 is US$24bn higher than the DGCI&S estimate.
FY11 current account deficit at 2.6% of GDP, down from 2.8% in FY10
For the full year, the current account deficit reached US$44bn, up from US$38bn in FY10. With
India’s crude oil basket at around US$110 per barrel versus the US$85 average in FY11, we
expect the current account deficit to creep up to around 3.1% of GDP in FY12.
Bullish on the market; portfolio poised to benefit from rates peaking out
We reversed our cautious stance on Indian equities in early June as we believe the valuation derating since the beginning of the year has priced in inflation and growth slowdown concerns, and
that the monetary-tightening cycle is close to its end. Our key overweights from a portfolio
perspective are Canara Bank (CBK IN), Power Finance (POWF), Maruti Suzuki (MSIL IN), Larsen
& Toubro (LT IN), Cipla (CIPLA IN) and Hindalco (HNDL IN).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India's current account deficit for the quarter ended March 2011 narrowed to 1.1% of GDP
from 3.1% of GDP a year earlier and 2.1% in the prior quarter. The improvement primarily
reflected a lower trade deficit.
Lower trade deficit drove the decline in the current account deficit
The trade deficit declined to 6.1% of GDP (US$30bn) in the March quarter from 7.7% a year
earlier and 6.8% in the prior quarter as exports climbed 47% yoy to US$77bn, while imports
rose 27% yoy to US$107bn. The current account deficit of US$5.4bn for the March quarter
was only slightly below the Bloomberg consensus estimate of US$6.0bn.
RBI’s trade deficit data seem to take into account the ’right‘ oil imports
Per RBI’s balance of payments (BOP) data, the absolute amount of the trade deficit for the
March quarter declined only 5% yoy from US$32bn. However, trade data released by
DGCI&S suggested a 26% yoy decline because of a lower increase in imports. We had
suspected the DGCI&S data was understating oil imports. The RBI’s BOP release states that
the DGCI&S is likely to upwardly revise its import numbers as the RBI’s imports estimate of
US$381bn for FY11 is US$24bn higher than the DGCI&S estimate.
FY11 current account deficit at 2.6% of GDP, down from 2.8% in FY10
For the full year, the current account deficit reached US$44bn, up from US$38bn in FY10. With
India’s crude oil basket at around US$110 per barrel versus the US$85 average in FY11, we
expect the current account deficit to creep up to around 3.1% of GDP in FY12.
Bullish on the market; portfolio poised to benefit from rates peaking out
We reversed our cautious stance on Indian equities in early June as we believe the valuation derating since the beginning of the year has priced in inflation and growth slowdown concerns, and
that the monetary-tightening cycle is close to its end. Our key overweights from a portfolio
perspective are Canara Bank (CBK IN), Power Finance (POWF), Maruti Suzuki (MSIL IN), Larsen
& Toubro (LT IN), Cipla (CIPLA IN) and Hindalco (HNDL IN).
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