Key Points
The deterioration is broad-based with worsening goods trade deficit and drop in services surplus as well as remittances from abroad..
While imports face upside pressures, exports may continue to underperform amid subdued global growth dynamics..
According to Madhavi Arora, lead economist at Emkay Global Financial Services, the September quarter will see substantial widening of CAD led by the sequential worsening of trade balance driven by higher oil, higher core imports and further slowing services exports..
While Indias growth prospects are viewed as comparatively attractive, stock market valuations are pricey. . Further, FPI inflows in the debt market could come under pressure as interest rates in the US may stay higher for longer..
In this context, focus on reviving exports both on the goods and services front along with attracting long term FDI inflows will be crucial in keeping external sector vulnerabilities at bay and rupee depreciation in check..
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