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MOSL: ECOSCOPE-4QFY19 CAD in line with expectations; India’s forex reserves rise by USD14.2b in 4QFY19

ECOSCOPE: 4QFY19 CAD in line with expectations; India’s forex reserves rise by USD14.2b in 4QFY19

 

• India's 4QFY19 current account deficit (CAD) at USD4.6b (0.7% of GDP) is lower than USD13.0b (1.8% of GDP) in 4QFY18 and USD17.7b (2.7% of GDP) in the previous quarter. The number is in line with our expectation and way lower than the market consensus of USD6.05b. This is because of lower oil prices, which averaged 1.9% lower YoY in 4QFY19 resulting in India's net oil import bill touching a 5-quarter low of ~USD32b in 4QFY19 (4.5% of GDP).
• Capital flows rose to USD19.2b in 4QFY19 (2.7% of GDP) from USD13.8b a quarter ago, but was lower than USD25.0b in 4QFY18. This was due to overall FPI inflow of USD9.4b in 4QFY19, against an inflow of just USD2.3b in 4QFY18 and a net outflow of USD2.1b a quarter ago.
• According to our calculations, (implied) domestic savings (domestic investments minus CAD) dropped a notch to 29.1% in 4QFY19 from 29.5% a quarter ago. But, domestic savings in FY19 was 29.2%, slightly higher than 29.1% in FY18.
• Despite better performance in 4QFY19, CAD in FY19 was at USD57.2b (2.1% of GDP) - the highest in six years due to a 29% YoY surge in the oil bill to USD140.5b during the year. Gold import bill in FY19 declined 3% YoY to USD32.9b. We expect CAD at 2.2% in FY20.