Geopolitical risk, monsoon and FIIs flows on investor’s watch in FY17: Survey
01/08/2016 14:50
Investors are concerned that geopolitical tension could upset credit markets globally, while progress of monsoon and foreign fund flows will also be the key factors to watch out in FY 17, says India Ratings and Research (Ind-Ra).
Ind-Ra believes the survey results reflect broader investor concern over high-profile global sources of risk such as Brexit, uncertainty of the future of EU, debt and forex volatility as a fallout of the globally protracted crises, rather than domestic issues.
The agency said that post Brexit, while the Indian currency has stabilised, the actual process of Brexit will impact not only global growth, but also on capital flows, which will have implication on the Indian currency.
Global growth is likely to remain weak, which will impact India’s trade and the current account, it said.
Investors believe the most important domestic factor to watch out for in FY17 is the progress of monsoon. The impact of a good monsoon will start to reflect from 2HFY17. At the same time the impact of the pay hikes of central government employees will also get reflected in the second half, however, the full impact will only be realised after salary revisions by state governments, urban local bodies, public sector undertakings and universities.
Respondents believe that the deterioration in asset quality of banks poses the highest risk to credit markets in FY17. In response of which, Ind-Ra believes that even post the asset quality review (AQR), NPA aging will keep the pressure on public sector banks in the form of higher credit costs. While the headline GNPL ratios may not move significantly, the high proportion of stressed assets will continue to hinder their ability to grow and participate constructively in the credit market.
Investors expect credit conditions for corporates in India to deteriorate somewhat in FY17. 52 per cent of investors expect fundamental credit conditions for corporates to deteriorate, however majority expect credit conditions of NBFCs and infrastructure projects to improve somewhat.
Investors are concerned about the refinancing challenges that will be faced by emerging corporates with turnover of less than Rs 5 billion. 42 per cent of investors believe that emerging corporates will face refinancing challenges in FY17.
01/08/2016 14:50
Investors are concerned that geopolitical tension could upset credit markets globally, while progress of monsoon and foreign fund flows will also be the key factors to watch out in FY 17, says India Ratings and Research (Ind-Ra).
Ind-Ra believes the survey results reflect broader investor concern over high-profile global sources of risk such as Brexit, uncertainty of the future of EU, debt and forex volatility as a fallout of the globally protracted crises, rather than domestic issues.
The agency said that post Brexit, while the Indian currency has stabilised, the actual process of Brexit will impact not only global growth, but also on capital flows, which will have implication on the Indian currency.
Global growth is likely to remain weak, which will impact India’s trade and the current account, it said.
Investors believe the most important domestic factor to watch out for in FY17 is the progress of monsoon. The impact of a good monsoon will start to reflect from 2HFY17. At the same time the impact of the pay hikes of central government employees will also get reflected in the second half, however, the full impact will only be realised after salary revisions by state governments, urban local bodies, public sector undertakings and universities.
Respondents believe that the deterioration in asset quality of banks poses the highest risk to credit markets in FY17. In response of which, Ind-Ra believes that even post the asset quality review (AQR), NPA aging will keep the pressure on public sector banks in the form of higher credit costs. While the headline GNPL ratios may not move significantly, the high proportion of stressed assets will continue to hinder their ability to grow and participate constructively in the credit market.
Investors expect credit conditions for corporates in India to deteriorate somewhat in FY17. 52 per cent of investors expect fundamental credit conditions for corporates to deteriorate, however majority expect credit conditions of NBFCs and infrastructure projects to improve somewhat.
Investors are concerned about the refinancing challenges that will be faced by emerging corporates with turnover of less than Rs 5 billion. 42 per cent of investors believe that emerging corporates will face refinancing challenges in FY17.
