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| Indian Economic Update
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Revenue Secretary Mr. Tarun Bajaj said that the FY23 tax revenue collections are expected to be far above than the budgeted estimate despite some concession on customs ...and excise duty. On GST, he said that there has been a healthy growth and he expects that the average revenues would be close to between INR 1.40-1.50 trillion for FY23. On the direct tax front, the initial indicators are showing promising results, he said
The Monetary Policy Committee hiked the policy repo rate by 50bps to 4.9% and kept the Cash Reserve Ratio unchanged on expected-lines. The MPC statement also saw the stance tweaked to “withdrawal of accommodation” instead of “remain accommodative” as earlier. Inflation projection was heightened to 6.7% for FY23 from 5.7% in April with the assumption of oil at USD 105/barrel and growth projection is retained at 7.2%
As per the OECD report, India’s growth is projected to slow to 6.9% in FY23 and 6.4% in FY24
The government hiked the Minimum Support Prices of Kharif crops for the 2022-23 crop year (July-June) by around 5-9%. The biggest hikes were reserved for pulses and oilseeds, Moong, Soybean and Sunflower seeds, as has been the norm in the past several years
India’ s Finance Secretary Mr. T V Somanathan said the Centre had saved INR 100 billion in FY22 on interest payments, after adopting new accounting mechanisms for Central Government agencies and Centrally Sponsored Schemes (CSS) for State Governments
Indian Government plans to monetise assets worth INR 752.2 billion in the coal mining sector in FY23. The move is likely to generate a revenue of INR 522 billion
The Finance Ministry has released the third monthly instalment of revenue deficit grant worth INR 71.8 billion to 14 states
At a virtual meeting of the BRICS group, Finance Minister Mrs. Nirmala Sitharaman said that the economic growth will continue to be supported by fiscal spending along with an investment push
India has tied up adequate supplies of Urea and Diammonium Phosphate (DAP) until December 2022 to meet the Kharif and Rabi demand for FY23. This may keep fertiliser prices in check in the months to come in domestic markets, as per a Government official
India's services PMI expanded at the strongest rate in over 11 years to 58.9 in May vs. 57.9 in April on the back of growth seen in new business. Elevated prices continue to dent business optimism
As per official sources, the finance ministry has asked key Infrastructure Ministries and Departments to speed up projects, setting a target of achieving at least 60% (INR 4.5 trillion) of the FY23 capital expenditure budget target (INR 7.5 trillion) by the end of September, 2022. The Centre wants to push capital expenditure to support the economy buffeted by high inflation, geopolitical risk and monetary tightening.
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| Global Update
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European Central Bank maintains its status quo on expected lines and provides forward guidance to hike rates by 25bps in July and further in September. It will end QE... by Jul, 01 2022
New Zealand’s Central Bank will begin selling the Bonds it acquired during the Quantitative Easing (QE) programme back to the Government and to dispose of its holdings over the next 5 years
Parts of Shanghai began to impose new lockdowns on Thursday with residents of Minhang district being forced to stay at home for two days in a bid to control COVID-19 transmission risk
UNCTAD released its World Investment Report yesterday in which it said that FDI inflows to India declined to USD 45 billion in 2021 from USD 64 billion in the preceding year
The BoJ Governor stated that a stable weaker Yen is positive for the overall economy and that the Central Bank will maintain its accommodative framework. His statements worked to drive the USD/JPY sharply higher, approaching levels not seen in the last 20 years
US Treasury Secretary Ms. Janet Yellen said that the Biden administration is looking to “reconfigure” tariffs imposed on Chinese goods under former President Donald Trump to make them “strategic”
Shanghai will lock down a south-western district on Saturday morning to conduct a mass COVID-19 testing drive. This is a first major movement restriction since the financial hub exited a bruising two-month crisis, earlier this month
Mortgage applications in the US fell to its lowest level in 22 years last week as homeowners are struggling to deal with increasing borrowing costs and double-digit price growth
The World Bank has cut its forecast for global economic expansion in 2022, further warning that several years of above-average inflation and below-average growth lie ahead with potentially destabilising consequences for low and middle- income economies. Global growth projections were reduced from 3.2% YoY to 2.9% YoY with downward revisions made across all geographies
World Bank cut India’s FY23 real GDP growth forecast to 7.5% from an earlier 8% on the back of inflationary pressures, supply-chain disruption and geopolitical tensions offsetting the recovery of consumption in the services sector
Bank of Japan Governor Mr. Haruhiko Kuroda pointed to some positive changes suggesting that progress is being made towards a stable inflation target while making it clear that policy tightening still isn’t an option for now. His statements reinforced the message that monetary divergence between the BoJ and other G-7 Central Banks is likely to remain in place that pushed the USD/JPY pair to a 20 year high
The JP Morgan Global Composite Output Index – produced by J.P. Morgan and S&P Global in association with ISM and IFPSM – posted 51.5 in May, up slightly from 51.2 in April
Unconfirmed media reports indicate that the US may allow for more sanctioned Iranian oil into the global markets, without reviving the 2015 nuclear accord. This news came after Saudi Arabia raised prices for its biggest market of Asia by more than expected. The Saudi Arabia price also expressed confidence on the state of global demand.
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| Equity
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Benchmark indices are likely to see a gap-down start today, tracking sharp cuts in global equities. Asian indices fell in early trade, extending global sell-off after... the European Central Bank painted a dim outlook for the region’s economy. US equities sold off sharply due to concerns ahead of US inflation data which is likely to remain elevated.
During the week Sensex lost 2.62% to close at 54303.44 while Nifty declined 2.30% to close at 16201.30
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| Debt
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Government Bonds are expected to open steady due to caution ahead of the INR 330 billion weekly gilt auction. Participants may avoid large bets ahead of the... US CPI data for May, scheduled after market hours today, which has seen lending cues to the Federal Reserve's pace of rate hikes.
10Y benchmark yield ended at 7.52% as compared to 7.46% of previous week
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| Oil
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Oil prices fell but still hovered at near three-month highs, amidst fears over new COVID-19 (partial) lockdown measures in Shanghai. Brent is currently trading... at USD 122.05/barrel. |
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| Gold
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Gold prices fell as elevated UST yields and a firm USD dimmed its safe haven appeal in the run-up to US inflation data. Gold is currently trading at USD 1849/ounce.... |
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| Currency
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Rupee may open steady against USD as the greenback remained firm against a basket of major currencies ahead of the release of US inflation data due later today.... Meanwhile, RBI’s intervention may curb any sharp movement in the currency pair. The Indian Rupee depreciated against the US dollar in the previous trading session moving to the 77.82 level. |
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| Sensex |
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During the week Sensex lost 2.62% to close at 54303.44 while Nifty declined 2.30% to close at 16201.30
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| Bond Yields |
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10Y benchmark yield ended at 7.52% as compared to 7.46% 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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