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Indian Economic Update
The Reserve Bank of India (RBI) hiked the Repo Rate by 35 bps to 6.25% with a 5:1 vote. The RBI Governor Mr. Shaktikanta Das... cautioned that “the battle against inflation is not over”, while acknowledging that it was expected to moderate. CPI inflation forecast for FY23 was retained at 6.7% and GDP forecast was lowered by 20 bps to 6.8%

India’s services sector output growth rose to a three-month high in November 2022 as new business inflows rose markedly, lifting optimism to its highest level in eight years, even as there was a substantial increase in input inflation

The Ministry of Railways, which is the second-biggest contributor to the Centre’s INR 6 trillion national monetisation pipeline (NMP), has only met 6% of its INR 300 billion FY23 monetisation target

The Central Government and the RBI have devised a country-specific plan towards implementation of overseas trade in rupees

Despite robust growth in tax revenues and release of capex loans by the Centre, capital expenditure by state governments saw a flat growth in April-October 2022. The combined capex of eighteen states was up just 1% on year at INR 1.96 trillion in April-October 2022

According to official sources, robust GST collections will help achieve the FY23 revenue growth target on the indirect taxes front, despite the impact of duty cuts on central excise and customs mop-up

The World Bank revised its GDP growth forecast upwards for India to 6.9% for FY23, saying the economy was showing higher resilience to global shocks

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Global Update
OPEC+ agreed to keep its oil production unchanged amid surging volatility and growing market uncertainty over... Chinese demand and Russian supply

Treasury Secretary Janet Yellen said she still anticipates that the US economy will avoid a recession, despite widespread forecasts by analysts and investors for another downturn

The G7 nations agreed to a USD 60 per barrel price cap on Russian seaborne crude oil after European Union members overcame resistance from Poland

More Chinese cities announced easing of coronavirus curbs. Shanghai eased some of its Covid restrictions

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Equity
The week opened to higher tracking gain in the Asian equity market. However, markets fell as will continue... to keep tightening weighed on the sentiment. US ISM non-manufacturing data also came in higher-than-expected. Also MPC hiked the policy rate in line with expectations but hawkish comments continued to weigh.

During the week Sensex lost 1.09% to close at 62181.67 while Nifty declined 1.07% to close at 18496.60

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Debt
Bond prices remained steady ahead of the MPC outcome. The same opened lower given the rise in UST Yields. MPC... raised rates by 35 bps in line with expectations, but Governor Das’s hawkish comments and the weekly debt sale worth INR 280 billion may limit gains as higher supply pressure may weigh on the prices.

The 10Y benchmark yield ended at 7.30% as compared to the previous week’s close of 7.22%

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Oil
Brent oil prices traded higher, as OPEC+ kept output steady, sanctions on Russian crude kicked in and China made further... progress towards reopening. However, the price took a hit as gasoline and distillate inventories rose in the US by 5.3 million barrels and 6 million barrels last week, indicating weaker demand.

Brent was trading at $76.72 on December 09, at 15:55 IST

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Gold
Gold prices traded higher post an overnight fall triggered by the USD and UST rebound, amid renewed prospects of... a more aggressive Federal Reserve hike.

Gold was trading at $1793.99 Per Ounce on December 09, at 15:55 IST

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Currency
The USD/INR opened lower on the back of a pullback seen in the USD. Fed member, Evan supported the slower pace of... rate hikes going ahead which weighed on the greenback. Any sharp movement is unlikely on the back of expected RBI interventions.
USD/INR was trading at 82.28 on December 09, at 15:55 IST

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Sensex
62181.67
-1.09%
During the week Sensex lost 1.09% to close at 62181.67 while Nifty declined 1.07% to close at 18496.60
 
Bond Yields
7.30%
8 bps
The 10Y benchmark yield ended at 7.30% as compared to the previous week’s close of 7.22%
 
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.