GDP Surges in June Quarter
India’s GDP has surged at 20.1% in Q1FY22, the fastest ever in the June quarter. The growth is supported by a low base of the previous year and a robust rebound in the manufacturing and export activity. Gross Value Added (GVA) in the economy rose 18.8% from a 22.2% dip in the first quarter of 2020-21.
For electricity, gas, water and other utilities, GVA also recovered beyond the pre-pandemic levels of 2019-20. In the first COVID-19 wave, the economy was fully shut, which impacted all sectors resulting in a decline of numbers. As the nation steadily stood up, the manufacturing supply kicked off, helped by resilient demand. This shot up the GDP numbers for the June quarter.
Economists have highlighted that the growth will continue given the surge in demand. The government’s push on the infrastructure sector will further boost the construction activity and other sectors.
CEA on India’s Growth
Chief Economic Advisor Krishnamurthy Subramanian thoroughly remained positive on India’s growth story. He projected that growth for the full year will be in the ‘ballpark’ of 11%, as predicted by the Economic Survey.
Structure reforms, the government's push for capital expenditure to enable private investment, and a rapid COVID-19 vaccination program are all driving India's growth, he said. Subramaniam expects the inflation rate to be in the range of 5-6% as it continues to moderate. On the US tapering tantrum, Subramaniam said that India won’t be affected by the easy monetary policy of the US Federal Reserve.
The government is expecting an imminent V recovery which is also the current state of our economy. Moving forward, India’s growth is seen to be rising as the external sectors are providing a stable cushion.
Nifty50 17,000 Run
On the last trading day of August, the Nifty50 closed the show by mounting to the 17,000 level. It closed 200 points over on the back of India’s fastest-growing economy. Despite the large-cap stocks virtually taking a backseat, the mid-cap and small-cap stocks pushed the benchmark indexes higher.
In fact, aside from hitting the high, it is the fastest 1,000 points gain for the Nifty50 in its history. Public sector banks, drug makers and metal stocks saw a surge in share value. With manufacturing and construction sectors flourishing, the companies are receiving a stronger momentum in supply. Demand continues to remain robust, further fuelling the sales.
With positive GDP numbers, the stock market is expected to rise to further high levels. Liquidity from the FIIs and HNIs and high retail participation has helped the stocks reach new highs. Market experts believe a continued rally fuelled by all the positive factors.
