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Indian Economic Update
Real GDP growth in Q1FY24 came in at a 4-quarter high of 7.8%. Trade, hotel, transport, communication and services related ...to broadcasting coupled with financial, real estate and professional services contributed the most to the growth.

The Centre announced a reduction of INR 200 in the price of cooking gas for all subscribers in addition to the existing subsidy. This move is likely to have a direct impact of 20-25 bps on retail inflation while the fiscal impact will be 10-15 bps

Eight states raised INR 159 billion from auctioning their debt or state government securities at a coupon of 7.42% YoY which is 6 bps less than the previous auction

RBI’s move to withdraw liquidity from the banking system has forced lenders to scout the market for funds, pushing up the issuance of Certificates of Deposits (CDs) to a 3-month high for the previous fortnight

India witnessed the driest August in more than a century as the country received 36% less rainfall than normal in 2023 according to the India Meteorological Department.

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Global Update
Key highlights from the annual Jackson Hole Economic Policy Symposium in US: (a) FOMC Chair Powell stated that interest rates will... stay high and could rise even further, should the economy and inflation fail to cool

(b) ECB President Lagarde emphasised that it is critical that inflation expectations remain anchored at 2%

(c) Bank of Japan Governor Kazuo Ueda said price growth remains slower than the Central Bank’s goal, explaining why officials are continuing with their current monetary-policy strategy

China’s manufacturing PMI rose to 49.7 in August (vs 49.3 in July). However, it remained in the contraction zone.

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Equity
During the week, Indian Equity indices traded in short-range tracking the Asian & US markets. Indices witnessed a jump as the Indian ...GDP grew by 7.8% in Q1FY24. Markets remained consolidated, given the data-packed week and monthly derivative expiry, but consistent selling by FIIs and poor monsoon in August raised concern among investors. We expect indices to open on a tepid note on the back of mixed global cues.

During the week Sensex gained 0.77% to close at 65387.16 while Nifty advanced 0.88% to close at 19435.30

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Debt
Government bond prices remained volatile as the UST yields fell, after investors awaited US employment data. Meanwhile, ...domestic GDP print along expected lines also supported the bond yields. Given the weekly auction, domestic yields are to remain largely range-bound with supply pressure primarily from the higher-end curve.

The 10Y benchmark G-Sec was trading at a yield of 7.18% on 01 Sep, 2023 at 15:45 IST

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Oil
Brent Crude Oil prices are trading higher with a stronger dollar as Saudi and Russia's supply cuts continued to extend into September ... and the number of oil rigs in US dropped due to a fire breakout at a refinery in Louisiana. OPEC+ supply cuts and decreasing oil inventories supported the market. To boost demand, China halved stamp duty on stock trading leading to a rally in their stock market.

Brent was trading at $87.80 on 01 Sep, 2023 at 15:47 IST

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Gold
Gold prices traded higher as the dollar index weakened and treasury yields lowered from weaker-than-anticipated US GDP data. ...Core PCE price index edged up 0.2% MoM in July matching expectations and consumer spending saw an increase. Investors now focus on US non-farm payroll data for further insights into monetary policy.

Gold was trading at $1944.29 Per Ounce on 01 Sep, 2023 at 15:47 IST

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Currency
The USD/INR pair traded flat after the greenback traded flat as investors became cautious ahead of the US payroll data,... due today. Besides, foreign fund outflows and rising crude oil prices weighed on the rupee sentiments. However, a sharp movement in the pair will need RBI intervention.

USD/INR was trading at 82.72 on 01 Sep, 2023 at 15:47 IST

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Sensex
65387.16
0.77%
During the week Sensex gained 0.77% to close at 65387.16 while Nifty advanced 0.88% to close at 19435.30
 
Bond Yields
7.18%

The 10Y benchmark G-Sec was trading at a yield of 7.18% on 01 Sep, 2023 at 15:45 IST
 
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.