The Indian stock market had a bumpy ride and the world economy too had jitters as the second wave of Coronavirus is hitting the world once again.
The Indian markets saw the roller coaster ride as the Foreign Funds were busy withdrawing their money. The rise in the US bond yields is one of the key reasons for the world markets to be nervous. The proposed corporate tax rate in the USA from 21% to 28% has also raised concerns about the MNC working in the USA. IMF has projected that India would grow at 12.5% GDP, but with the second wave of virus causing disruption in working, it may be reduced.
RBI on the domestic front has kept the interest rates at status quo with announcement of buying Rs. 1 lakh bonds in the first quarter. This would mean that liquidity will not be problem in the market, but the sentiment has been hit by the second wave of COVID-19. The Consumer Price Index (CPI) has come to 5.52% which is close to the RBI comfort zone of 6%. The rise in the inflation could put pressure on the RBI to raise rates in the later part of the year. The Index of Industrial Production (IIP) has come down to - 3.6% again in the negative zone which shows that the manufacturing is still weak and may not be consistent.
The mutual funds industry after the gap of 9 months saw inflows coming for the first time to the tune of Rs. 9115 crores mainly in ELSS, Sector funds and Flexi cap funds. The Debt MF saw redemptions to the tune of Rs. 52000 crores while the SIP which is the most preferred form of investment for the retail saw the inflow of Rs. 7500 crores on monthly basis. This means that the retail investors are confident about the long term prospects of the Indian Economy.
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