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| Indian Economic Update
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The Reserve Bank of India is considering a “phased introduction” of a central bank digital currency as it will need legal changes to be made in the nation’s... foreign-exchange rules and information-technology laws, Deputy Governor T. Rabi Sankar said
The Indian Economy is expected to make a strong rebound in FY22, registering economic expansion of 8-10% albeit on a low base, said Deepak Parekh, chairman Housing Development Finance Corp (HDFC)
Union Government seeks Parliament nod for a gross additional spend of INR 1.87 tn and net additional spending of INR 236.75 bn. The extra spending is on top of the budgeted INR 34.83 tn earmarked for the FY22 in the budget
The Union government's tax collections in Q1 FY2021 stood at INR 5.58 tn, registering a growth of 107% YoY. The GST compensation owed to the states for FY21 stands at INR 811.79 bn, while INR 553.45 bn is yet to be released to the states and UTs for the first 2 months of FY22. Last year Union Government borrowed INR 1.1 tn which was released to the states in lieu of GST compensation while GoI has released INR 750 bn in FY22, which would amount to nearly half of the total shortfall for the year.
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| Global Update
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The European Central Bank (ECB) maintained status quo and recalibrated its forward guidance on expected lines to accommodate the new symmetric 2% inflation target. The new... guidance provided indicated the central bank plans to keep policy rates for a fairly long period of time. However, the decision to change the forward guidance was not unanimous among the members of the Governing Council. The ECB Governor also ruled out reducing or ‘tapering’ the Pandemic Emergency Purchases Program (PEPP) at the current juncture while also saying that any premature tightening of policy is not on the cards. The central bank continued to indicate that medium-term inflationary pressures remain subdued and expressed some degree of caution from the spread of the ‘delta variant’ of the virus
The Centers for Disease Control (CDC) said that US is ‘at another pivotal moment in this pandemic’ as cases in under-vaccinated states and agegroups have started to rise over the last fortnight
Bank of England Deputy Governor Broadbent said that there are strong indications that the current rise in inflation could be temporary
China, world’s top commodity exporter said that it will increase the amount of base metals it sells from its state reserves to keep a lid on surging raw material prices. China will sell 30000 tons of copper, 90000 tons of aluminum and 50000 tons of zinc from stockpiles, as per National Food and Strategic Reserves Administration. The levels being auctioned are about 50% to 80% higher than what was offered in the previous month
President Joe Biden dismissed fears that the U.S. will experience persistent inflation as the economy emerges from the pandemic, while cautioning that the hospitality sector may take have longer recovery time in part because workers in the sectors are seeking better wages and working conditions
The European Union’s refusal to renegotiate the Brexit deal, governing Northern Ireland has put the bloc on a fresh collision course with the U.K.
Media reports indicate that the FOMC Chairman appears to have strong support for a re-nomination among White House personal. However, the decision on whether to extend Powell’s term beyond Feb 2022 will be discussed in September. So far, the matter has not been brought forward to Biden as yet.
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| Equity
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Benchmark equity indices are likely to open mixed tracking global cues, as Asian indices remain mixed in early trade as regulatory concerns resurfaced in Hong Kong and China. Adding to... the woes, concerns over multiple countries in Asia battling with the recent surges in COVID-19 cases is likely to dampen investor sentiment.
During the week Sensex lost 0.31% to close at 52975.80 while Nifty declined 0.42% to close at 15856.05
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| Debt
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Government bond prices may open slightly lower ahead of the 260-bln-rupee weekly gilt auction. Participants may look to trim their holdings to make room for the... fresh supply of gilt.
The 10Y benchmark yield ended at 6.16% as compared to previous week close of 6.13%
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| Oil
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Global crude oil prices are trading lower, following gains in the prior three sessions after data from both API and EIA showed an unexpected rise in US crude inventories,... the first since May. In addition, fears lingered over soaring COVID-19 cases globally. The CDC warned Thursday that the Delta variant is one of the most infectious respiratory diseases ever seen by scientists, accounting for over 83% of sequenced cases in the US. Meanwhile, China's Nanjing city has started mass virus testing of its 9.3 million population as the city faces local virus cluster. Brent crude prices are trading at USD 73.51/barrel.
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| Gold
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Gold prices are trading steady as lower bond yields negate pressure from a firm dollar. Yields on U.S. Treasuries eased on Thursday after an auction of USD 16 bn in 10-year... TIPS was bid at a record low. However, the dollar index held close to an over three-month peak against its rival, making gold more expensive for holders of other currencies. The number of Americans filing new claims for unemployment benefits rose to a two-month high of 419K last week, a reminder that the labor market was far from being out of the woods as the nation confronts a resurgence in new Covid-19 infections. Gold is trading at USD 1804.4/oz.
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| Currency
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Indian Rupee may open steady against the dollar as the greenback was largely steady against a basket of major currencies in early trade, with investors now focusing on the US Federal... Reserve's monetary policy meeting next week; any sharp appreciation in the Rupee may be limited by persistent RBI intervention. The Indian Rupee closed stronger at the 74.46 level against the US dollar in the previous trading session.
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| Sensex |
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During the week Sensex lost 0.31% to close at 52975.80 while Nifty declined 0.42% to close at 15856.05
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| Bond Yields |
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The 10Y benchmark yield ended at 6.16% as compared to previous week close of 6.13%
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Source: ICICI Bank Research, Private Banking Investment Strategy Team, Bloomberg and CRISIL.
Disclaimer:
The information set out herein has been prepared by ICICI Bank in good
faith and from sources deemed reliable. ICICI Bank does not provide any
assurance as regards the accuracy of such information. ICICI Bank does
not accept any responsibility for any errors whether caused by
negligence or otherwise or for any direct or indirect loss / claim/
damage caused to any person, arising out of or in relation to the use of
information communicated herein.
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