India: Investment improved in Q3-FY20 – Standard Chartered

Sandeep Kanihama FXStreet Contributor

Analysts at Standard Chartered point out that India’s Capex data published by the Centre for Monitoring Indian Economy (CMIE) for Q3-FY20 (ended December 2019) shows a sequential improvement in most investment variables after two quarters of sharp declines.

Key Quotes

“A few large projects drove the improvement; we believe sustainability is key. New project announcements jumped nearly threefold on a q/q basis due to a large aircraft procurement announcement. However, even after adjusting for this one-off factor, new announcements were up 30% q/q, led by the private sector. Project completions nearly doubled q/q, driven by two large private-sector project completions in the steel and housing sectors. Projects under implementation remained stable, with a marginal increase in private projects.”

“Stalled projects stabilised at 6.4% of GDP (INR 13.3tn) in Q3-FY20; financing constraints have been the key reason for stalled investments since March 2018. This reflects the ongoing financing challenges facing India’s non-banking financial companies (NBFCs) and the rest of the financial sector.”

“Going forward, we will look for the improvement in capex to be sustained before concluding that a firm investment recovery is underway. We expect a slow recovery as challenges in the financial sector are resolved only gradually.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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