Economy

The subdued investor sentiments follow the US Federal Reserve's projection at least two interest rate hikes in 2023, a year earlier than forecasted in the March meeting. Around 10.15 a.m., Sensex was trading at 52,403.34, lower by 98.64 points or 0.19 per cent from its previous close of 52,501.98. It opened at 52,122.25 and has touched an intra-day high of 52,403.93 and a low of 52,099.72 points.

FPIs have made a comeback after pulling out investments for two consecutive months. In April and May, net selling by FPIs stood at Rs 9,659 crore and Rs 2,954 crore. The return of the foreign funds comes amid declining number of daily Covid-19 cases and robust Q4 earnings.

The economic downturn due to Covid-19 led to the plight of the sector. Be it the supply chain disruption, the shortage of shipping containers to skyrocketing freight costs over the last year, many elements have collectively increased the woes of the SMBs across the globe.

India's GDP growth has been projected at 8.5 per cent in FY22, said ratings agency ICRA. The year-on-year (YoY) growth of GDP and gross value added (GVA) at basic prices (at constant 2011-12 prices) is expected to reach 8.5 per cent and 7.3 per cent respectively, in FY2022.

"We expect inflationary pressures to re-emerge as the Fed continues with its policy of patience," the economists, led by David Folkerts-Landau, chief economist and global head of research, said. "It may take a year longer until 2023 but inflation will re-emerge."Unlike other economists who believe inflationary pressures will recede over time, the Deutsche Bank analysts think otherwise.

In a tweet later, she added that global minimum tax would end the race-to-the-bottom in corporate taxation, and help the global economy thrive, by levelling the playing field for businesses and encouraging countries to compete on positive bases, such as educating and training their work forces and investing in research and development and infrastructure.

After falling for 11 consecutive weeks, the Nomura India Business Resumption Index (NIBRI) registered its first uptick, picking up to 63.6 percentage points (pp) for the week ending 30 May (36.4 pp below pre-pandemic level) from a low of 60.3 pp in the previous week

Upward revisions to consumer spending and non-residential fixed investment were offset by downward revisions to exports and private inventory investment, according to the latest estimate released on Thursday by the Department's Bureau of Economic Analysis, a month after the "advance" estimate.

"Asia-Pacific economies with weak infrastructure are particularly vulnerable to physical climate risks, which can hurt banks' asset quality because a natural disaster can damage borrowers' assets or disrupt their cash flow. Many banks in the region also face asset risks from large exposures to sectors susceptible to carbon transition risks"

However, absolute demand will catch up with pre-pandemic levels only after fiscal 2023. The demand in the first half of this fiscal will be impacted by the second wave of the pandemic. Nevertheless, healthy recovery is expected in the second half, much like the previous fiscal, the ratings agency said. That said, established developers with well-managed balance sheets would grow faster than the industry.