US Economy : It’s no longer the driver of global economic growth…

The July update of IMF was revealing in more ways than one. Firstly, the IMF expects that neither the US nor the UK is likely to drive global growth in the next couple of years. In fact, the US economy is likely to grow at just about 2.3% in the current year while the world economy will grow at around 3.5%. Secondly, the growth is going to be driven by Western Europe, Japan and China. Interestingly, Western Europe could emerge as a beneficiary of BREXIT and a strong dollar. Thirdly, India will continue to be the fastest growing large economy in the world with real GDP growth rate of 7.5%. So, why exactly is the US going to be less of an influence on global growth? Continue reading

ONGC-HPCL deal will be more than the sum of parts…

Last week, the government finally announced the deal between HPCL and ONGC. Under the terms of the deal, ONGC will buy the government’s stake in HPCL. This will be the first step towards the integration of the entire value chain of oil under one single line. That is something the Reliance group has achieved to perfection and that is also the trend globally. In the short term the benefits may not be visible but in the longer term the whole will certainly be greater than the sum of the parts. Here are 8 things you need to know about the ONGC – HPCL deal… Continue reading

Weak inflation and growth but rate cuts look unlikely…

The monthly macro data announced in July actually mixed. Inflation came in lower than expectation at 1.54%. This was largely driven by food inflation coming in negative at -2.12%. The real disappointment was the IIP growth for the month of May, which was just about 1.7%. In the case of IIP, it was manufacturing that put pressure on the overall IIP growth. The bigger question that follows logically is whether this could be a trigger for a rate cut? Here are some key reasons why there may not be a rate cut in the August policy despite the inflation data and the IIP data making a strong case for a rate cut. Continue reading

ONGC-HPCL deal will be more than the sum of parts…

Last week, the government finally announced the deal between HPCL and ONGC. Under the terms of the deal, ONGC will buy the government’s stake in HPCL. This will be the first step towards the integration of the entire value chain of oil under one single line. That is something the Reliance group has achieved to perfection and that is also the trend globally. In the short term the benefits may not be visible but in the longer term the whole will certainly be greater than the sum of the parts. Here are 8 things you need to know about the ONGC – HPCL deal… Continue reading

Using recapitalization bonds to boost bank’s capital…

Indian banks and the RBI are currently finding themselves in a tight situation. To begin with, Indian banks are sitting on a pile of bad debts. According to conservative estimates, the NPAs of the banking system are to the tune of $90 billion and if the stressed assets including the CDR assets and other restructured assets are added up then it comes up to nearly $180 billion. Continue reading

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