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| Indian Economic Update
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India's manufacturing PMI remains robust at 56.2 in August vs 56.4 in July as demand spikes ...
Gross GST collections for August 2022 was INR 1.44 trillion, up 28% YoY, crossing the INR 1.4 trillion mark for the sixth consecutive month
India's Q1FY23 GVA and GDP growth at 12.7% and 13.5% came in well below our and consensus estimates owing to subdued growth in the manufacturing and mining sector. Consumption and investment were key drivers of growth while services sector showed a rebound. Nominal GDP growth was reported at 26.7% on the back of higher inflation
Central Government's fiscal deficit fell to 20.5% of FY23 BE for the period April – July 2022 vs. 21.2% by the end of June 2022 on the back of muted revenue spending
FDI equity inflows into India contracted 6% to USD 16.5 billion Q1FY23 from USD 17.5 billion during Q1FY22; total FDI shrank 0.79% YoY to USD 22.3 billion in Q1FY23
Eight Core industries growth moderated to six-month low of 4.5% YoY in July 2022 compared with 13.2% YoY in the previous month led by broad-based deceleration
The Government scraps sale of Central Electronics Ltd. (CEL) while decision on sale of Pawan Hans is still pending and is likely due next month, as per reports
Commerce and industry minister Piyush Goyal said that India is looking at getting duty-free access for different products, identified under One District One Product (ODOP) initiatives, to promote exports. Products such as gold, jewellery, toys, handicrafts and handlooms hold huge opportunities for India, he added
Finance Minister Nirmala Sitharaman at the eighth anniversary of PMJDY, spoke on the importance of financial inclusion as a step towards inclusive growth and enumerated on the milestones of the program which, alongside JAM, enabled DBT to beneficiaries during COVID period
Inflation trajectory continues to be "heavily contingent" upon the evolving geopolitical developments, international commodity prices and global financial sector developments, Reserve Bank Deputy Governor Michael Debabrata Patra has said
Union Government considers inclusion of older off-Budget borrowings in its books; borrowings of Government institutions like HUDCO & NABARD are being looked into, as per official sources
Indian Government imposed curbs on exports of wheat products in an attempt to address the rising prices with export allowed subject to permission on certain cases.
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| Global Update
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The JP Morgan Global Manufacturing PMI fell to a 26-month low of 50.3 in August, down from 51.1 in July and only slightly above the 50.0 no change mark ...
European Central Bank Governing Council member Mario Centeno cautioned policy makers against taking action that would risk exacerbating the business cycle
Global bonds slumped the most in a generation as central bankers determined to quash inflation even at the cost of a recession. Meanwhile, the Bloomberg Global Aggregate Total Return Index of Government and investment-grade corporate bonds has fallen more than 20% below its 2021 peak, the biggest drawdown since its 1990 inception
Cleveland Fed President stated that the Central Bank needs to raise policy rates to the 4% mark and leave it there for some time to cool inflation. Federal Reserve New York President stated that policy needs to move in to remain in restrictive territory
The ECB Governing Council officials indicated that policy needs to tighten and played down the possibility of aggressive rate hikes
The European Union is set to meet its gas storage-filling goal two months ahead of target as the bloc braces for a tough winter with Russia limiting supplies and soaring energy prices. European Union set goal to fill reserves up to 80% by November. Germany on track to meet national storage goal before deadline
European Central Bank Chief Economist Philip Lane urged a "steady pace" of interest-rate increases in fighting record inflation to minimise negative consequences -- seeming to push back after some of his colleagues floated a 75 basis-point hike at next week's meeting
Sharp stock-market losses show investors have got the message that Jerome Powell and his colleagues are serious about tackling inflation, said Minneapolis Fed President Neel Kashkari
Investors have responded to the hawkish guidance provided by global central bankers during the Jackson Hole Symposium that was led by the FOMC Chair. Powell stated that fighting inflation will remain the main goal and that the policy rate may need to be held at a high level for an extended period of time. In response to his statements, the fed funds futures market is pricing in a higher terminal rate of 3.85% by March 2023 as compared to 3.7% that was priced in prior to his comments
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| Equity
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Benchmark indices are likely to open lower amidst mixed Asian equity markets as investors await the key US non-farm payrolls data for August. Higher-than... expected print will weigh on the riskier assets as it will cement the expectations for the US Fed to keep hiking rates aggressively as iterated by several Fed members recently.
During the week Sensex gained 1.43% to close at 58803.33 while Nifty advanced 1.30% to close at 17539.45
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| Debt
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Government bond prices are likely to open steady ahead of weekly debt sale worth INR 330 billion. The demand for Government securities continues to remain robust on the ...back of hopes of inclusion into global bond indices, the announcement may come as early as this September. However, any sharp move in UST and crude oil may limit the gains.
10Y benchmark yield ended at 7.23% as compared to 7.25% of previous week.
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| Oil
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Brent crude oil prices climbed on Friday on bets that OPEC+ will discuss output cuts at a meeting on Sept. 5. However, prices were still subdued on fears COVID 19 ... curbs in China. Oil is trading at USD 93.46/bb |
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| Gold
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Gold prices fell further as the US dollar gained ahead of key payrolls data. While U.S. payrolls are expected to be lower in August than the prior month, ...a stronger-than-expected reading could give the Federal Reserve more space to hike interest rates aggressively and could weigh on gold price. Gold is trading at USD 1707.55/oz. |
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| Currency
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The USD/INR pair is likely to open lower as the greenback corrected from the multi-year high in the last session ahead of the US non-farm payrolls data. ...Any sharp movement in the pair is unlikely on the back of expected RBI interventions. The Indian Rupee closed weaker against the US dollar in the previous trading session moving to the 79.55 level |
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| Sensex |
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During the week Sensex gained 1.43% to close at 58803.33 while Nifty advanced 1.30% to close at 17539.45
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| Bond Yields |
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10Y benchmark yield ended at 7.23% as compared to 7.25% of previous week.
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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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