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Domestic Growth and Tempering Global Dialogues | BNP Paribas Mutual Fund

Domestic Growth and Tempering Global Dialogues

Indian markets started the week on a positive note and despite intermittent volatility traded with a positive bias. Positive macro-economic forecasts which showed India’s GDP accelerating in the fiscal year 2018-19 and maintaining a similar momentum in the following two years, boosted investor sentiment. A relatively dovish turn by the Federal Reserve, strong US jobs data and optimism over US-China trade talks boosted investor sentiment also contributed to the strength in the markets.

Macro-Economic Updates

On the economic front, the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation released the First Advance Estimates of National Income at Constant (2011-12) and Current Prices, for the financial year 2018-19 which somewhat boosted investor sentiment. The advance estimates show that India's GDP would grow 7.2% in 2018-2019, accelerating from 6.7% growth in 2017-18. Real gross value added (GVA), i.e, GVA at Basic Constant Prices (2011-12) is anticipated to increase 7.0% in 2018-19 up from 6.5% growth in 2017-18. Additionally, the World Bank forecasted that India's GDP is expected to grow at 7.3% in the fiscal year 2018-19, and 7.5% in the following two years, attributing it to an upswing in consumption and investment growth. The World Bank also said that India will continue to be the fastest growing major economy in the world.

Domestic Developments

On the macro front, the GST council in its 32nd meeting held yesterday has taken the major decision to give relief to Micro, Small and Medium Enterprises (MSME) (including small traders) among others. The council increased turnover limit for the existing composition scheme. The limit of annual turnover in the preceding financial year for availing composition scheme for goods shall be increased to Rs 1.5 crore. Special category states would decide, within one week, about the composition limit in their respective states.

Global Updates

Global markets were upbeat as well on reports that the US and China have narrowed differences over trade. Additionally, minutes from the December's Federal Open Market Committee meeting, which indicated caution on future interest rate hikes, also helped to buoy sentiment.

The US and China wrapped up their first face-to-face trade negotiations since a temporary tariff truce was declared last month. In a statement released after the talks had concluded, the US trade representative's office said that officials had discussed making any deal "subject to ongoing verification and effective enforcement." The statement added that negotiators had "conveyed President Trump's commitment to addressing our persistent trade deficit and to resolving structural issues in order to improve trade between our countries." China's commerce ministry said on Thursday that trade talks with the United States this week were extensive and detailed, and established a foundation for the resolution of each other’s' concerns.

Meanwhile, the release of Fed minutes revealed that some central-bank officials had reservations about an interest-rate increase last month due to market volatility, though policy makers voted unanimously in favour of the move. They also recommended that the Fed should be "patient" and stressed that "a relatively limited amount of additional tightening" is appropriate.

Institutional Activity

The year started with some selling pressure from foreign institutional investors (FIIs) which somewhat abated over the last week. In the first nine trading sessions of the year, FIIs have net sold Indian equities worth INR 1685. Domestic institutional investors have been net sellers as well and have net sold Indian equities worth INR 1543 crore, in the same time period.


Disclaimers: The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but BNP Paribas Asset Management India Private Limited (BNPPAMIPL) makes no representation that it is accurate or complete. BNPPAMIPL has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. BNPPAMIPL undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. The words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as an investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, Asset Management Company, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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