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MOSL: Morning India (2/January/20): 1. EcoScope (A. Economic activity growth improves in Nov’19); 2. Automobiles | Dec-19 Wholesales Volume

MOrning India (2/January/20):  1. EcoScope (Economic activity growth improves in Nov’19); 2.  Automobiles | Dec-19 Wholesales Volume

 

Today’s top research idea

EcoScope: Economic activity growth improves in Nov’19 but expect real GDP growth to weaken further in 3QFY20

• Our in-house Economic Activity Index (EAI) for India's real GVA suggests that economic growth improved to 5% YoY in Nov'19, much better than the all-time low of 1.8% in Oct'19. The improvement was broad-based with non-farm GVA growth picking up from 2.1% in Oct'19 to ~6% in Nov'19.
• EAI-GDP also grew at 4-month high of 6.1% YoY in Nov'19, as against 5% YoY a month ago, driven primarily by a lower decline in investments. Consumption activity, on the other hand, posted decent growth of 6.4%, supported by fiscal spending, passenger traffic and fuel consumption.
• While EAI-GVA/GDP growth was better in Oct-Nov'19, it was still lower than the growth in 2QFY20. Therefore, only if the growth is faster in Dec'19 can we expect a similar GDP growth of ~4.5% in 3QFY20. We thus rule out any possibility of a growth more than 4.5% in 3QFY20.

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Relief for govt as GST collections remain above ₹1 trillion mark

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