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Indian Economic Update
RBI Monetary Policy Committee hiked repo rate by 25bps to 6.50%, and retained stance as withdrawal of accommodation. Inflation for FY24 was ...revised higher to 5.3%, while FY24 real growth was revised lower to 6.4% (from 6.5%)

Indian household's inflation expectations for the current period moderated by 20bps to 9.6%, while consumer confidence improved further, as per the results of the Reserve Bank of India’s forward-looking surveys

The government has hiked windfall Profit Tax levied on domestically produced crude oil as well as on the export of diesel and ATF, in line with firming international oil prices

India’s Services Purchasing Managers index slowed to 57.2 in January 2023 from a six-month high of 58.5 in December 2022, with softening orders spurring caution in companies' business outlook for the year

The Union government's total tax collections in FY23 are likely to exceed the revised estimates (INR 30.43 trillion) by about INR 250 billion, as per finance ministry officials

Consumer affairs secretary, Mr. Rohit Kumar Singh, in an interview said that the prices of key food items, including vegetables and pulses are likely to remain stable in 2023 due to Government's policy.

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Global Update
Federal Reserve Chair Jerome Powell stuck to his message that interest rates need to keep rising to quash inflation. He also indicated that ...if labour markets remain tight, there could be a bias to do more if required than is even currently priced in by the market

The spread between the UST 10 yr and UST 2 yr has reached 86bps that is the widest spread since the 1980s indicating that investors expect growth to slow down sharply going forward

ECB members continued to provide a hawkish bias indicating that more tightening would be required and that rates will remain in restrictive territory for some time.

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Equity
Benchmark indices opened lower this week amidst a subdued Asian equity market. Concerns regarding further rate hikes by the US ...Fed and higher rates for a longer duration scenario wherein, keeping the policy rates into restrictive territory for a period of time was highlighted, which weighed on the market sentiment.

During the week Sensex declined 0.26% to close at 60682.70 while Nifty gained 0.01% to close at 17856.50

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Debt
Government Bond prices opened lower this week as UST yields rose sharply post the release of US payrolls data. MPC’s continuation with the stance ...and the weekly gilt auction worth INR 300 billion weighed on the sentiment. Higher supply amidst rising global yields will weigh on bond prices.

The 10Y benchmark yield ended at 7.36% as compared to the previous week’s close of 7.28%

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Oil
Brent oil prices traded higher this week as markets weighed a return in demand from China against supply concerns and fears... of slower growth in major economies curbing consumption. Traffic congestion in major cities has tripled since the end of the Lunar New Year holiday, while domestic flights have soared.

Brent was trading at $86.46 on February 10, at 15:56 IST

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Gold
Gold’s prices traded range bound amid a USD which was mixed against other currencies. Buying by Central Banks remained buoyant, with China ...raising its gold reserves for a third straight month. The prices stabilised after Fed officials reaffirmed the view that interest rates will need to keep rising. Fed governor, Chris Waller said that more increases are needed to bring inflation back to its 2% target.

Gold was trading at $1863.61 Per Ounce on February 10, at 15:56 IST

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Currency
During the week, the USD/INR pair opened higher this week as USD rose in the previous session on the back of improved employment scenario in the ...US. Any sharp movement in the pair is unlikely on the back of expected RBI interventions.

USD/INR was trading at 82.50 on February 10, at 15:56 IST

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Sensex
60682.70
-0.26%
During the week Sensex declined 0.26% to close at 60682.70 while Nifty gained 0.01% to close at 17856.50
 
Bond Yields
7.36%
8 bps
The 10Y benchmark yield ended at 7.36% as compared to the previous week’s close of 7.28%
 
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.