Economic growth to benefit steel consuming segments
Steel production in India grew by 3.1% to 103 million tonnes and consumption increased by 7.9% to 90.7 million tonnes during the 2017-18 period.
A recent IMF projection pegs India’s GDP to rise by 7.3% in 2018 and 7.4% in 2019 as compared to 6.7% in 2017. This sustained growth of the economy will benefit major steel consuming segments such as construction, real estate, capital goods, consumer goods, automobiles and the energy sector. On the back of this increased demand, India is poised to become the 2nd largest producer of steel in the near future, moving up from the current 3rd position. The government has also mooted a plan to boost domestic steel capacity to 300mt per annum by 2030.
Low per capita consumption in India–65 kg versus the world average of 214 kg, encouraging stance of the government towards the industry and a decline in steel capacity in China is also expected to act in favour of the steel industry.
Various government initiatives such as Pradhan Mantri Awas Yojna, Smart Cities mission, Pradhan Mantri Gram Sadak Yojna, Bharatmala Project and 24×7 Power for All scheme are also expected to drive steel demand.
Investors can benefit from the theme by investing with the Metal Tracker smallcase.
Steps taken by IRDAI to help non-life insurance sector
In a report, Moody’s Investor Service stated that India’s insurance sector will grow strongly on the back of robust GDP growth and evolving regulations. According to the report, 7% plus real GDP growth and low insurance penetration will together support the double-digit growth of the non-life insurance sector over the next 3-4 years.
Liberalisation of the sector by admitting foreign reinsurers and steps taken by IRDAI to ensure level playing field for incumbents as well as new entrants is expected to benefit the non-life sector. Regulatory reforms like raising the ceiling on foreign ownership of Indian insurers are also expected to improve the sector’s capital strength.
The report stated that the Ayushman Bharat scheme will give impetus to health insurance. The scheme will help grow health premiums and provide insurers with cross-selling opportunities.
During fiscal 2018, the total gross premiums for both non-life and life insurance sectors grew 11.5% to Rs 6 lakh crore, bringing the five-year compound annual growth rate to 11%.
Investors can get exposure to the insurance sector by investing with the Insurance Tracker smallcase.
Markets update
Sell off by Foreign Portfolio Investors (FPI’s) led benchmark indices to close in the red last week. Nifty 50 closed down -1.16% at 10,780.5 and Sensex closed down -0.99% at 36,025.5 this week. FPI’s sold Rs 1,892 crore worth of shares this week.
