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    Exclusive: Economic activity trackers have started dipping in July, says Credit Suisse's Neelkanth Mishra

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    Exclusive: Economic activity trackers have started dipping in July, says Credit Suisse's Neelkanth Mishra

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    Most of the activity indicators have been suggesting that the levels have flattened out since the middle of June and have started to dip in July, Neelkanth Mishra, managing director and India equity strategist at Credit Suisse told CNBC-TV18 in an exclusive interview.

    Most of the activity indicators have been suggesting that the levels have flattened out since the middle of June and have started to dip in July, Neelkanth Mishra, managing director and India equity strategist at Credit Suisse told CNBC-TV18 in an exclusive interview.
    Talking about the situation, Mishra said, “In this environment with so much excess money supply, financial assets do get inflected because people do not want to consume and they have savings - not comfortable or confident enough of consuming, the cost of funds keeps dropping and then you get into financial assets, we saw that in state government bonds, we have seen that in equities and my worry is that this worsens going forward. What we are seeing globally is that while there is a stagnation globally as well and perhaps even a dip, US retail sales are more or less back to pre-crisis levels. So our exports are going to do better than imports because our domestic economy is still slowing and because of that the pressures on the balance of payments side are going to become much more intense and therefore this situation is going to last for a while.”
    Speaking about excess liquidity, “There are problems, we need to keep watching, it can go out of control. Therefore, the excess liquidity needs to be pulled back the moment the velocity of money starts picking up that is the economy starts to normalise,” Mishra said.
    “Most of the activity indicators that we are tracking - and now everyone else is tracking like goods and services tax (GST), mobility trackers, power demand this is where demand is available on a daily basis - have been indicating that the activity levels have flattened out since the middle of June and in July have started to dip. In fact, even things as comprehensive as rail freight have seen a dip in the first 10 days of July. So it was very surprising when companies started reporting that rural sales are doing well. The likely reason is that many of the indicators we track have an urban bias,” he further added.
    “We forget that while agriculture by definition is rural, rural is no longer about agriculture. So rural gross domestic product (GDP) only 29 percent comes from agriculture, 71 percent is non-agriculture,” he said.
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