Business & Economy Current Affairs 2017

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Benchmark Indices Closes at all time High

The 30-share BSE Sensex reached its record close of 30,248. The index has surpassed its previous record closing of 30,133.35 reached on April 26. It also surpassed its intra-day peak of 30,184.22 recorded on April 27 to hit a fresh intra-day high of 30,271.60.

The NSE index Nifty has breached the 9,400-mark for the first time. The NSE index registered a record high of 9,415, surpassing its previous milestone of 9,377 reached on May 5.

The indices have settled at their respective closing highs after the IMD’s new monsoon forecast has predicted that India is likely to receive higher monsoon rainfall as the concern over the El Nino weather condition has eased. Earlier, IMD had predicted that this year’s monsoon rains will be at 96% of the 50-year average of 89 cm. The new forecast has raised the sentiments of the stock market as the prospects of higher agricultural and economic growth is brighter. This has resulted in the shares of consumer goods and agriculture-dependent companies to rise.

Stock Market Index

A share market Index shows how a specified portfolio of share prices is moving in order to give an indication of market trends. It is a basket of securities and the average price movement of the basket of securities indicates the index movement, whether upwards or downwards. BSE Sensex is one index. The BSE SENSEX is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange.

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IMF: India will Grow at 7.7% in 2018-19

The International Monetary Fund in its regional economic outlook has predicted the growth rate of India as 7.2% in the 2017-18 fiscal and 7.7% in 2018-19 fiscal. The report has stated that the disruptions caused by the demonetisation would be offset by a favorable monsoon and continued progress in resolving supply-side bottlenecks. However, it has predicted the investment recovery to remain modest and uneven across sectors. Though weaknesses in bank and corporate balance sheets is likely to affect the near term credit growth, the report cites confidence and policy credibility gains and continued fiscal consolidation and anti-inflationary monetary policy to be the factors that underpin macroeconomic stability.

According to the report, IMF has recommended the removal of long-standing structural bottlenecks to enhance market efficiency. The report has revised the growth downward in India due to effects from the currency exchange initiative and in South Korea due to political uncertainty.

According to the report, improving agricultural productivity in the labour-intensive agricultural sector remains a key challenge. It has said that much more needs to be done to address structural bottlenecks and improve market efficiency. Liberalising commodity markets as per the report will help in infusing more flexibility in the distribution and marketing of farm produce and will enhance the competitiveness, efficiency, and transparency in state agriculture markets. IMF has said that input subsidies to farmers should be administered through direct cash transfers as underpricing of agricultural inputs would have large negative impacts on agricultural output.

IMF

International Monetary Fund (IMF) was established on December 27, 1945 with stated objectives to promote international economic cooperation, international trade, employment, and exchange rate stability, including by making resources available to member countries to meet balance of payments needs. Its headquarters are in Washington, D.C. The IMF works to improve the economies of its member countries.

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Forex Reserves Touch Life Time High of $372.73 billion

According to the Reserve Bank of India’s weekly statistical supplement, India’s foreign exchange (Forex) reserves have increased by $1.594 billion to touch a lifetime high of $372.73 billion in the week that ended on April 28. The increase was due to increase in foreign currency assets (FCAs), The reserves had increased by $1.250 billion to $371.14 billion in the previous week.

Components

The components of India’s Foreign Exchange Reserves include:

  • Foreign currency assets (FCAs)
  • Gold
  • Special Drawing Rights (SDRs)
  • RBI’s Reserve position with International Monetary Fund (IMF)

FCAs constitute the largest component of the Forex Reserves. FCA surged $1.569 billion to $349.055 billion in the reporting week. FCAs consist of US dollar and other major non-US global currencies. It also comprises of investments in US Treasury bonds, bonds of other selected governments, deposits with foreign central and commercial banks. FCAs include with them the effects of appreciation or depreciation of non-US currencies like the euro, pound, and the yen and is expressed in terms of dollars.

The gold reserves stand at $19.869 billion. SDRs’ value has increased $8.5 million to reach $1.460 billion. RBI’s reserve position with the IMF also increased by $15.8 million to reach $2.347 billion.

 

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