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| Indian Economic Update
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India's services sector continued its robust performance with S&P Services PMI for India rising to a 13-year high of 62.3 in July... from 58.5 in June on the back of strong demand
According to the data released by the Controller General of Accounts, the Centre’s fiscal deficit during Q1 FY24 stood at INR 4.51 trillion or 25.3% of FY24 BE vs 21.2% during Q1 FY23
The Minister of State for Finance, Pankaj Chaudhary informed the Rajya Sabha that the Central Government's debt at the end of March 2023 was 57.1% of GDP (INR 155.6 trillion) falling from the high of 61.5% of GDP in FY21
GST collection for July 2023 was reported at INR 1.65 trillion, an improvement of 11.4% YoY. The collection has crossed INR 1.6 trillion mark for the fifth time since the inception of GST
S&P Manufacturing PMI eased marginally for July to 57.7 vs 57.8 in June but continued to maintain strong growth momentum and remained in expansionary territory
As per CMIE reports, unemployment rate fell to 7.95% in July from 8.45% in June due to rise in agricultural labour demand
Growth of eight key infrastructure sectors increased to 8.2% YoY in June 2023 due to an increase in the production of crude oil, natural gas and electricity, according to the official data
The Goods and Services Tax Council, in a near unanimous decision, approved 28% GST on online game, casinos and horse races with effect from . The new regime would be reviewed after six months of implementation.
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| Global Update
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Fitch Rating cut US rating to AA+ from AAA and criticised the country’s ballooning fiscal deficits and an ‘erosion of governance’... that led to repeated debt limit clashes over the past two decades
The US Treasury stated that it would increase the size of its weekly auctions to USD 103 billion next week reflecting softer-than-expected tax revenue growth in 2023 so far
The US Treasury stated that it would increase the size of its weekly auctions to USD 103 billion next week reflecting softer-than-expected tax revenue growth in 2023 so far
China's manufacturing activity fell for a fourth straight month in July, albeit at a slower pace, reinforcing the need for further policy support to boost domestic demand
The Bank of England (BoE) raised its key interest rate by 25 bps to 5.25%, its 14th back-to-back increase and warned that borrowing costs were likely to stay high for some time.
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| Equity
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Benchmark indices opened higher this week tracking the Asian equity market. However, indices turned lower as investors ...sold off after rating agency Fitch downgraded the US credit rating. Going ahead, markets could remain subdued given gloomy global environment
During the week Sensex declined 0.66% to close at 65721.25 while Nifty lost 0.66% to close at 19517.00
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| Debt
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Government bond prices are likely to open lower as 10-year UST was trading lower by 6 bps after PCE inflation index showed that ...increased price cooled in June. Prices opened higher after Fitch rating announcement, given the rising global yields and RBI MPC next week, it is expected to pause its policy rate again, we expect domestic yields to be range bound.
The 10Y benchmark G-Sec was trading at a yield of 7.20% on 04 Aug, 2023 at 15:45 IST
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| Oil
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Global crude oil prices have moved sharply higher over the last month responding to the visible tightening in physical ... markets that has taken place. The tightness reflects reduced supply from OPEC+ members and Russia, while there has been a seasonal pick-up in demand from the US and Europe. Going forward, we expect a much tighter market in H2-2023 as compared to H1-2023 as demand appears to be stronger than expected given the soft-landing scenario in the global economy and as reduced supply from OPEC+ members and Russia take a hold. We see a range of USD 80/bbl to USD 90/bbl for H2-2023 resulting in an average of USD 82.4/bbl for 2023 that compares with our previous expectations of an average of USD 78/bbl
Brent was trading at $85.61 on 04 Aug 2023 at 16:19 IST
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| Gold
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Gold prices are trading flat after Fitch downgraded the US's long-term foreign currency issuer default rating from AAA to AA+ due to ...fiscal and governmental uncertainties. Demand concerns rise as the world gold council announced that the global demand for gold excluding the OTC transactions fell 2% YoY in Q2. US labour market data is likely to provide further guidance.
Gold was trading at $1932.99 Per Ounce on 04 Aug 2023 at 16:19 IST
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| Currency
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The USD/INR pair is expected to trade in a tight range. US ADP employment data exceeded market forecasts, raising bets for more... rate hike. However, elevated oil prices and weak domestic equities will weigh on the pair. Moreover, persistent RBI intervention is likely to work to restrict any sharp movement in the pair.
USD/INR was trading at 82.84 on 04 Aug 2023 at 16:19 IST
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| Sensex |
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During the week Sensex declined 0.66% to close at 65721.25 while Nifty lost 0.66% to close at 19517.00
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| Bond Yields |
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The 10Y benchmark G-Sec was trading at a yield of 7.20% on 04 Aug, 2023 at 15:45 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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