An early resolution to the US debt ceiling crisis and an end to US government shutdown augurs well for the Indian economy.
“The early resolution is positive for Indian exports and there will be gradual pick up in merchandise and services export to the US,” said Anis Chakravarty, senior director, Deloitte India. “It is a positive development for current account deficit (CAD) as well,” he said.
At $40.5 billion, the US accounts for 12% of India’s merchandise exports. India’s IT companies earned $39.4 billion (or 58% of their total exports) from the US.
Ending of shutdown has now cleared a major uncertainty and stock markets will take cues from domestic factors.
“Had the shutdown been protracted, then the odds of a taper would have been lowered substantially, raising the case for flows to emerging markets,” said Tirthankar Patnaik, director, India strategist and chief economist, Religare Capital Markets. “This means that if the shutdown had been extended then the funds flow to India could have increased thus boosting the stock markets,” he said.
Now, the stock markets and the rupee will wait for more clarity on the tapering.
“The tapering of fiscal stimulus will be delayed beyond January and this factor is playing in favour the rupee,” said Aninday Banerjee, currency analyst, Kotak Securities. “We expect rupee to trade in the 60-63 range over the short term,” he said.