Forum Views - Aug 2024

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Dr. Vispi Rusi Bhathena, PhD (h.c.)

Chief Executive Officer

Dr. V. Aditya Srinivas

Chief Operating Officer

and Chief Economist

Economy and Markets Shine Together

Indian stock markets are at an all-time high, and economic indicators show strong signs of

growth and resilience. In June, the Goods and Services Tax (GST) collection reached `1.74 lakh

crore, indicating the stabilization of GST with an average collection exceeding `1.5 lakh crore.

This robust collection demonstrates strong economic momentum. The Indian economy is

resilient and gaining strength.

In the United States, inflation has come down to 3.30%, close to the estimated 3.40%. The US

Federal Reserve has set a target of 2% for inflation.

T H E

BBF SECRETARIAT

Currently, interest rates stand at 5.25%, a multi-decade high. The upcoming US elections will be

a key event, potentially influencing the Fed's policy under the new administration.

The European Central Bank (ECB) has reduced its interest rate by 0.25%, bringing it from 4% to

3.75%. Inflation in the Eurozone has decreased from 10.6% in 2022 to 2.6%, prompting the ECB

to cut rates. It is the first major central bank to do so ahead of the US Fed. This downward

movement in interest rates is expected to start by the end of the year, which is critical for

boosting global demand and consumption.

The Reserve Bank of India (RBI) kept the Repo Rate unchanged at 6.5% in its previous monetary

policy meeting. Despite the Consumer Price Index (CPI) inflation being at a 12-month low of

4.75%, the RBI remains cautious, anticipating potential stickiness in inflation in the coming

months, thus adopting a wait-and-watch approach.

Indian stock markets are at an all-time high, driven by substantial inflows from both domestic

and foreign investors. In 2024, Foreign Institutional Investors (FIIs) invested `11,000 crore,

while mutual funds contributed `1,94,000 crore, primarily from domestic sources. Monthly

Systematic Investment Plan (SIP) flows into the markets are close to `21,000 crore, reflecting

the confidence of retail investors in the Indian growth story and their long-term vision.

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