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Mint
2 days ago
- Business
- Mint
US Fed revises growth, inflation forecasts: Is US economy entering stagflation? How may it impact Indian stock market?
As expected, the US Federal Reserve left the policy rate unchanged at 4.25 per cent to 4.50 per cent on June 18, reiterating the risks arising from the trade war triggered by President Donald Trump's tariff policies. The Fed remains in "wait-and-watch' mode as it is early to authentically assess the real effective impact of Trump's tariffs on the world's largest economy. Amid tariff-led uncertainty, the Fed believes inflation will rise and growth will falter in the US. Fed Chair Jerome Powell said inflation may accelerate over the summer as the impact of President Donald Trump's tariffs reaches US consumers. The Fed forecast GDP growth of 1.4 per cent in 2025, down 0.3 per cent from the March meeting. By the end of the year, it sees unemployment rising to 4.5 per cent and inflation at 3 per cent, well above the current level. The Fed's outlook for the US economy carries hues of stagflation. At the current juncture, the US economy is in healthy shape. Inflation eased surprisingly in May, even though experts expected a spike after Trump's "Liberation Day" tariff announcements on April 2. The US consumer price index (CPI) increased 0.1 per cent month-on-month in May, while year-on-year it rose 2.8 per cent. K. Joseph Thomas, the head of research, Wealth Management at Emkay Global Financial Services, pointed out that inflation fell in the US, as in the run-up to tariff announcements, consumer spending spiked in the US, which subdued the price impact to some extent. However, Thomas highlighted that the Fed is still wary of the likely nature of the incoming inflation data, and they believe that the fog of uncertainty is still clouding the vision. Therefore, any future rate cuts would be data-dependent. "A close look at the US growth and inflation numbers underlines the potential for economic growth to slow down further, with growth numbers coming down sequentially, and the latest number indicating a contraction. The numbers point to the potential for stagflation, and no full-fledged stagflation exists at present," said Thomas. Devarsh Vakil, Head of Prime Research at HDFC Securities, observed that the US economy is experiencing a period of measured deceleration, with real GDP growth projections revised downward to 1.4 per cent for 2025 and 1.6 per cent for 2026, representing a notable reduction from earlier March forecasts. This moderation reflects both cyclical adjustments and policy-driven uncertainties that are reshaping economic dynamics. While the US economy currently navigates a complex environment of slowing growth and persistent inflation pressures, Vakil underscored that the combination of labour market strength, measured wage growth, and responsive monetary policy significantly reduces the probability of a stagflationary outcome in the near term. "Key risk factors to monitor include the evolution of trade policy impacts, trends in consumer confidence, and the Federal Reserve's ability to strike a balance between its dual mandates. Success in managing these elements will largely determine whether the current economic deceleration represents a healthy adjustment or a more concerning structural shift," said Vakil. A slowdown in the US economy may not have a direct impact on India, given that the Indian economy is largely driven by domestic demand. However, the US Federal Reserve's interest rate decisions will influence the movement of the dollar and could affect the investment stance of foreign portfolio investors (FPIs). A prolonged pause by the Fed may also delay rate cuts by other central banks, potentially tightening global liquidity conditions. Thomas believes US-centric developments may not seriously affect domestic economic growth, which is driven mostly by domestic demand. "External factors may have only a fleeting influence on the macro variables or the markets. The fundamentals being strong for the economy beyond the immediate future, the domestic market is expected to further progress in its secular uptrend," said Thomas. The Fed's reluctance to reduce rates may also lead to caution among other central banks, including the RBI. "The expediency to lower the rates is lowered for the other central banks. This applies to the RBI too, and the RBI has already moved away from an accommodative stance to a neutral stance. The decline in the dollar against currency majors may face some immediate challenges. The reversal of the trend witnessed so far may gradually get reflected in the dollar index," said Thomas. Vakil pointed out that the weakening US dollar, primarily due to escalating concerns over the mounting debt burden and fiscal sustainability of the US, is creating additional incentives for USD-based investors to explore offshore opportunities. "A depreciating dollar not only erodes the relative attractiveness of US assets but also enhances the appeal of foreign investments when converted back to dollars," said Vakil. Vakil believes emerging markets, particularly India, are positioned as primary beneficiaries of this capital reallocation, offering compelling growth prospects, improving corporate governance, and attractive valuations relative to developed markets. "India's robust economic fundamentals, expanding market capitalisation and increasing inclusion in global indices make it an attractive destination for investors seeking alternatives to US market exposure," said Vakil. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
Economic Times
3 days ago
- Business
- Economic Times
J&K Bank will diversify loan mix in rest of India for stable growth: MD
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel KOLKATA: Private sector lender Jammu & Kashmir Bank, which has two-third of its business coming from the disruption-prone Kashmir valley, is attempting to diversify the loan mix in rest of India to build stability in business growth with a focus on building the housing and mid-corporate book, managing director Amitava Chatterjee told bank, in which the governments of union territories of Jammu & Kashmir and Ladakh hold a majority share with 59.4% interest, plans to reduce concentration risks."The new MD plans to firmly accelerate the business from rest of India with a clear focus on building the housing and mid-corporate book," Anand Dama, senior research analyst with Emkay Global Financial Services said on brokerage house had a meeting with the bank management to understand its long-term business plan and effect of the recent Pahalgam terror attack on tourists."We do have an aim to reduce the concentration risk and try to have a balanced growth from both the geographies, whether it is the rest of India or Jammu & Kashmir," Chatterjee told analysts in a post-earnings call held last who assumed charge on December 30 last year, said the Pahalgam terror attack had limited impact on its business as exposure to tourism-linked lending was less than 1% of the portfolio, which stood at Rs 1.07 lakh crore at the end of March."While Jammu & Kashmir will continue to receive our attention as it has been through the decades, we will try to balance it out with a better growth from the rest of India and that too not essentially from the corporate loan book," he said last bank is trying to improve retail lending like housing loans and car loans outside Kashmir.
Time of India
3 days ago
- Business
- Time of India
J&K Bank will diversify loan mix in rest of India for stable growth: MD
KOLKATA: Private sector lender Jammu & Kashmir Bank, which has two-third of its business coming from the disruption-prone Kashmir valley, is attempting to diversify the loan mix in rest of India to build stability in business growth with a focus on building the housing and mid-corporate book, managing director Amitava Chatterjee told analysts. The bank, in which the governments of union territories of Jammu & Kashmir and Ladakh hold a majority share with 59.4% interest, plans to reduce concentration risks. "The new MD plans to firmly accelerate the business from rest of India with a clear focus on building the housing and mid-corporate book," Anand Dama, senior research analyst with Emkay Global Financial Services said on Tuesday. The brokerage house had a meeting with the bank management to understand its long-term business plan and effect of the recent Pahalgam terror attack on tourists. "We do have an aim to reduce the concentration risk and try to have a balanced growth from both the geographies, whether it is the rest of India or Jammu & Kashmir," Chatterjee told analysts in a post-earnings call held last month. Live Events Chatterjee, who assumed charge on December 30 last year, said the Pahalgam terror attack had limited impact on its business as exposure to tourism-linked lending was less than 1% of the portfolio, which stood at Rs 1.07 lakh crore at the end of March. "While Jammu & Kashmir will continue to receive our attention as it has been through the decades, we will try to balance it out with a better growth from the rest of India and that too not essentially from the corporate loan book," he said last month. The bank is trying to improve retail lending like housing loans and car loans outside Kashmir.
Mint
12-06-2025
- Business
- Mint
Silver Shines Bright: Key reasons behind the surge and crucial levels to track
Silver prices have captured investor attention once again, rallying strongly in recent weeks and breaking through key psychological barriers. On Thursday, silver futures surged by ₹ 715 to ₹ 1,06,107 per kilogram on the Multi Commodity Exchange (MCX), reflecting a 0.68 percent gain. The July delivery contract saw heightened activity, with over 19,000 lots traded, suggesting rising speculative and institutional interest. Globally too, silver traded higher at USD 36.31 per ounce in New York, continuing its upward trajectory near multi-year highs. Analysts attributed the rally to a fresh build-up of positions as traders and investors sought exposure to the white metal amid macroeconomic and geopolitical uncertainties. With silver hovering near historic resistance levels, market experts are advising a strategy of buying on dips, especially given the structural tailwinds supporting long-term demand. Silver's rally is not merely a speculative play but is being supported by robust fundamentals. Industrial demand has seen a consistent rise, particularly from clean energy applications such as solar panels and electric vehicles. According to the World Silver Survey, industrial consumption reached a record 681 million ounces in 2024, up 4 percent from the previous year. Importantly, solar-related demand alone is projected to grow from 5,671 tonnes in 2024 to 7,488 tonnes by 2029, indicating the white metal's critical role in the green energy transition. Investor interest is also growing steadily, with exchange-traded funds (ETFs) witnessing inflows of over 300 tonnes in June—almost double compared to the previous month. A softening dollar and cooling inflation have contributed to renewed interest in precious metals, positioning silver as both a growth asset and a defensive play in portfolios. The global supply of silver, meanwhile, remains constrained, further adding to the bullish sentiment. Riya Singh, Research Analyst at Emkay Global Financial Services, noted that silver has significantly outpaced gold over the past week. While gold rose a modest 0.6 percent, silver surged more than 9 percent, narrowing the year-to-date performance gap between the two metals. Both are now up nearly 25 percent in 2024. ETF positioning, technical breakouts, and safe-haven buying amid trade tensions have all played into silver's hands, Singh added. Notably, the gold-silver ratio has declined from over 100 in April to around 92, suggesting silver has more room to rally before reaching historical parity levels. Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, emphasized that silver's recent breakout above ₹ 1,01,000 is not a fleeting move. Historically, such breakouts have led to significant follow-through rallies. In 85.7 percent of past instances, silver has delivered positive 12-month returns post-breakout, with an average gain of 26.1 percent. Even over 3- and 6-month periods, the strike rates have been an impressive 61.5 percent and 55.5 percent, respectively. According to Sheth, this breakout marks the end of a prolonged consolidation phase and indicates the beginning of a fresh momentum cycle. He believes macro tailwinds like geopolitical tensions, liquidity shifts, and central bank policy pivots will continue to provide fertile ground for silver to outperform. The rally is being driven by both retail and institutional investors, making the current setup structurally bullish. Silver's rally appears to be more than just a speculative bounce. Backed by strong industrial demand, investor inflows, and favourable macroeconomic indicators, the metal has reasserted its relevance as both an industrial commodity and a store of value. With technical charts flashing green and analysts pointing to more upside potential, silver may be poised to outperform in the coming months. As analysts continue to advise accumulating on dips, investors looking to diversify their portfolios may find an opportunity in this white metal's ongoing surge. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Hans India
10-06-2025
- Business
- Hans India
Next stage of reforms should allow lending against shares for land allocation: Report
New Delhi: The next stage of reforms in India demands a gradual withdrawal of lending restrictions to corporates for land, against shares and such, a report said on Tuesday. Real estate, in aggregate, accounts for one-third of investment activity in the country, without access to low-cost funds for most developers. "After RERA implementation, builders' consolidation, and timely and transparent data availability, etc, the underwriting risk is no longer systemic or disproportionately higher than that for any other industrial project finance,' said the report by Emkay Global Financial Services. Likewise, lending against shares is a critical need – especially as new-age companies have more intangible assets than hard physical collateral. "It is about time that we start respecting market assessment of equity value as much as the due consideration we give to replacement cost of physical assets," the report noted. "After a long time, we have in Sanjay Malhotra — current RBI Governor — an intellectual with a flair for data, and one who comes with a firm pro-growth ideology. And this is what sets him apart," the report noted. The RBI monetary policy, through its actions and communication, marks a seismic shift – aimed at nudging the potential growth rate of the economy higher. The actions taken last Friday should be viewed in the context of the current economic landscape, said the report. Historically, policy rate moves in increments of 50bps reflect economic duress. "The recent surprise cut in our opinion is a catch-up on an unusually restrictive policy in the last fiscal and resets the trajectory of economic growth higher. This action also reflects confidence in conducting the monetary policy to align with the domestic economic reality – a decoupling of monetary policy is a precursor to a decoupled economic growth," it noted. The aggressive moves on the policy front have been calibrated with a change in stance, back to 'neutral' mode. The earlier switch to an accommodative stance was done only in the prior policy meeting. While the official version is that under the present circumstances, there is limited space to lower rates further, a more practical reasoning is simply to wait out the usual 6-9 months of the transmission impact to play out, remain data-dependent, as well as firmly communicate the RBI's inflation fighting credentials – dovish actions completed with a mildly hawkish signalling, the report said.
