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| Indian Economic Update
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India’s GST collection rose by 12.4% YoY to hit a record high of INR 2.1 trillion in April due to a variety of factors, including streamlining... of accounts by businesses for FY24, electoral expenses by political parties and a modest recovery in rural consumption
Unemployment was the highest for the younger age brackets although it could be 'transient' as Indian youths spend more time acquiring skills and trying their hand at entrepreneurship, MPC member, Ashima Goyal stated
The forecast of an above-normal monsoon, high-frequency indicators along with a more benign global outlook bode well for the Indian economy to grow. The RBI has projected the economy to grow by 7% in FY25 while the IMF has projected it to be at 6.8%
Indian economy is estimated to have grown by 7.6% in FY24
India’s core sector grew by 5.2% YoY in March 2024 from 7.1% YoY in February. Fertilizers and petroleum refinery products dragged the index down while steel, electricity and coal continued to drive the core sector activity. For FY24, core growth was at 7.5% against 7.8% in FY23
The RBI stated that 97.76% of the INR 2000 denomination banknotes have returned to the banking system and only INR 79.61 billion worth of the withdrawn notes are still with the public. The total value of INR 2000 banknotes in circulation was INR 3.56 trillion when the withdrawal was announced
India's services exports declined by 1.3% in March to USD 30 billion while imports fell by 2.1% to USD 16.61 billion, according to a report by the RBI. The trade surplus during March 2024 was USD 13.4 billion
Despite recording a slight moderation in activity, India’s Manufacturing PMI posted a 58.8 print in April amidst strong demand conditions. In March, the Manufacturing PMI was 59.1
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| Global Update
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An ECB survey showed that inflation expectations could be moderate going forward. Prices are seen advancing by 3% over the... next 12 months, which is the lowest level since December 2021, down from 3.1% in February
The Bank of Japan maintained its overnight policy rate in the 0% to 0.1% band while keeping the pace of its OMO purchases unchanged. In terms of forward guidance, it stated that the policy adjustments are dependent on data although it emphasized that ‘accommodative financial conditions will be maintained for the time being’
The US Treasury announced its financing estimates projected at USD 243 billion in net privately-held marketable borrowing in the April to June 2024 quarter. This was USD 41 billion above the initial estimates, reflecting weaker tax receipts expectations
The FOMC maintained status quo on expected lines. While it announced a QT taper to USD 25 billion from USD 60 billion for treasury securities, which was much greater than the expectations of USD 30 billion, the decision reflected the need to minimize disruption in the money market from balance sheet reduction
The World Gold Council’s latest report on gold demand trends suggested that the demand for gold rose by 3% YoY to 1238 tonnes in Q1 2024, the strongest first quarter since 2016. However, the demand excluding OTC fell by 5% due to continued ETF flows
The global economy is growing faster than expected only a few months ago, thanks to the resilient US activity while inflation is converging more quickly than expected with the Central Bank’s targets, the OECD said, upgrading its outlook.
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| Equity
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The benchmark equity indices opened higher this week tracking gains in Global Market peers. The indices moved range bound through ...the week with the US Fed announcements and the global cues influencing the market. We expect the market to continue its positive momentum supported by healthy domestic institutional investors and Q4 earnings.
During the week Sensex gained 0.20 % to close at 73878.15 while Nifty advanced 0.25 % to close at 22475.85
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| Debt
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10-year government bond yields opened flat as investors adopted a wait-and-watch stance in the domestic market and remained ...range bound. The yields were influenced by the Fed Rate announcement and the lack of strong global cues. Participants will enter an auction of INR 280 billion on Friday with supply pressure on long-term yields.
The 10Y benchmark G-Sec was trading at a yield of 7.15 % on 03 May, 2024 at 15:40 IST
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| Oil
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Brent crude oil prices opened lower but progressed upwards during the week. After the US stepped up efforts to secure a... truce in Gaza, the geopolitical risk has eroded significantly as indicated by the recent data showing a steep build-up in the US Crude Stock. The expectations of increased US buying and the prospect of continued output cuts from OPEC+ beyond June were the major factors for the upward movement. Investors will look forward to the US economic data and indicators of future crude supply from OPEC+ to determine their strategies.
Brent was trading at $83.86 on 03 May, 2024 at 15:43 IST
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| Gold
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Gold prices traded flat and continued to hover around USD 2300/oz levels as the market lacked direction after the Federal Reserve kept... rates unchanged while announcing that it would diminish the pace of the balance sheet reduction. Investors will focus on the US Nonfarm Payrolls data due this week.
Gold was trading at $2300.07 Per Ounce on 04 May, 2024 at 15:45 IST
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| Currency
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The USD/INR traded range bound for most of the week with the US Fed Interest Rate announcement being the major influence. ...Any sharp movement in the pair will be limited by possible intervention by the Central Bank.
USD/INR was trading at 83.432 on 03 May, 2024 at 15:46 IST
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| Sensex |
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During the week Sensex gained 0.20 % to close at 73878.15 while Nifty advanced 0.25 % to close at 22475.85
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| Bond Yields |
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The 10Y benchmark G-Sec was trading at a yield of 7.15 % on 03 May, 2024 at 15:40 IST
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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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