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Indian Economic Update
MPC voted unanimously to keep the repo rate unchanged at 4%. An accommodative stance was maintained with 5:1 majority. The Reverse Repo Rate was kept unchanged... at 3.35%. RBI retained its FY22 growth forecast at 9.5% and inflation at 5.3%

Commerce and Industry Minister Mr. Piyush Goyal on Thursday, appealed to the steel makers for assessing the manufacturing costs and exploring the possibilities of offering relief to small industries that use the commodity for producing components and other engineering products

The Government has accorded approval to eight companies under the Production Linked Incentive (PLI) scheme to promote domestic manufacturing of medical devices, the Ministry of Chemicals and Fertilisers, said yesterday

India's fuel demand fell about 11.4% YoY in November to 17.1 million tonnes, as per data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil ministry. The sales of gasoline, or petrol, were 0.7% YoY lower at 2.7 million tonnes, while diesel sales slipped 7.6% YoY to 6.5 million tonnes

The National Technical Advisory Group on Immunisation (NTAGI), the Central Government’s expert panel on immunisation, “has not made any recommendations” on any of the issues, a government official said

About INR 0.52 trillion GST compensation is pending to States until Sept, as stated by the Finance Ministry. Giving details of the Goods and Services Tax (GST) compensation released and pending to be released as on Nov 24, 2021, the Minister of State for Finance Mr. Pankaj Chaudhary said in the Lok Sabha, that INR 1.10 trillion and INR 1.59 trillion was released to the States as back-to-back loan in FY21 and FY22, respectively

Over 50 per cent of India's eligible adult population is fully vaccinated against COVID-19, said the Union Health Minister, as the cumulative vaccine doses administered in the country exceeded 1.28 billion. Over 84.8% of the adult population in India has been administered the first dose

Government states that Indian companies raised INR 528 billion through 61 IPOs in Apr-Oct this fiscal, higher than the funds mopped up through this route in the last financial year. Out of the 61 companies that hit the markets until October, 34 entities were Small and Medium Enterprises (SMEs)

India currently has the fourth largest foreign exchange reserves in the world, the Minister of State for Finance Mr. Pankaj Chaudhary told Lok Sabha, yesterday. The forex reserves stood at USD 640.4 billion as on Nov 19, 2021, he said

According to FADA, the retail sales of PVs fell 19.4% YoY to 240,234 units in November, due to the shortage of semi-conductors, while sales of two-wheelers fell just 0.8% to 1.43 million units. The increased cost of vehicles, due to raw material inflation and high fuel costs, weighed on the November sales

The Union Cabinet approved the extension of the Pradhan Mantri Awaas Yojana – Gramin until Mar 2024, to facilitate the construction of houses yet to be completed

The Union Cabinet approved the Ken-Betwa project under the National Perspective Plan for interlinking rivers. The project is expected to be implemented in 8 years, costing INR 393.2 billion to the Centre.

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Global Update
In response to the USD/CNY touching a three-year low, the PBOC raised the reserve ratio required for FX Deposits by 2 percentage points from 7% to 9% that will be effective... from Dec 15, 2021. PBOC had taken a similar 2% increase in this measure back in June 2021. PBOC also set a weaker reference rate in today’s session for the USD/CNY. The impact on the CNY appears to have been modest so far

Ratings agency Fitch downgraded the property developers China Evergrande Group and Kaisa Group to ‘Restricted default’ status, saying they had defaulted on offshore Bonds, while a source said that Kaisa had started work on restructuring its USD 12 billion offshore debt

The Omicron variant of COVID-19 is 4.2 times more transmissible in its early stage than Delta, according to a study by a Japanese scientist who advises the country’s health ministry, a finding likely to confirm fears about the new strain’s contagiousness

The US Commerce Secretary Gina Raimondo said that the US is working towards creating a powerful economic framework agreement with Asian nations—focusing on areas including coordination on supply chains, export controls and standards for artificial intelligence—that could be completed by 2022

European Central Bank Governing Council member Martins Kazaks backed the additional stimulus, as the Omicron variant of COVID-19 can inflict significant damage on the Euro Area economy

President Mr. Joe Biden warned Russian President Mr. Vladimir Putin on Tuesday, that the West would impose "strong economic and other measures" on Russia, if it invades Ukraine, while Putin demanded guarantees that NATO would not expand farther eastward

China will cut the rate for relending facility by 25 bps to the rural sector and small firms from Tuesday, the PBOC announced on its website. The Central Bank will lower the three-month relending rate to 1.7%, the six-month rate to 1.9% and the one-year rate to 2%, the announcement showed

Pfizer shot provides partial Omicron shield, as per an early study. Researchers at the Africa Health Research Institute in Durban, South Africa, found that Omicron resulted in about a 40-fold reduction in levels of neutralising antibodies produced by people who had received two doses of the Pfizer, BioNTech shot, compared with the strain detected in China almost two years ago. However, the company also said that a booster shot might help in building immunity

People's Bank of China (PBOC) reduced the Reserve Requirement Ratio (RRR) for banks by 50 bps, thereby releasing CNY 1.2 trillion (~ USD 188 billion) in long-term liquidity to bolster the slowing economic growth. This will be the second RRR cut by PBOC in a year

Geo-political tensions intensified after the US and allies appear to be preparing sanctions on Russia, in case it invades Ukraine. The Biden administration announced that US officials would not attend the 2022 Winter Olympics in Beijing over China’s human rights abuse. Meanwhile, the Deputy Prime Minister of New Zealand Mr. Grant Robertson said, they will not represent at the Beijing Winter Olympics in February at a diplomatic level.

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Equity
Benchmark indices are expected to remain steady, tracking global indices. Asian indices are mixed, as investors were cautious ahead of the US consumer... price data, due for release today. US stocks closed higher as positive developments around the efficiency of vaccines in protecting against the Omicron variant of COVID-19 boosted sentiment.

During the week Sensex gained 1.88% to close at 58786.67 while Nifty advanced 1.82% to close at 17511.30

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Debt
Government Bond prices are likely to open steady, as market participants may refrain from placing large bets ahead of the INR 240 billion weekly-gilt auction. ...However, the UST yields remain elevated, which may weigh on the prices.

The 10Y benchmark yield ended at 6.37% same as compared to the previous week.

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Oil
Global crude oil prices are trading lower, backed by fears about the economic outlook of the world’s biggest oil importer, following the ratings downgrade of... two Chinese property developers, and after the recent lockdowns that have been imposed in the Euro-zone. Brent crude prices are trading at USD 74.27/barrel.

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Gold
Gold prices are trading higher as concerns about the China outlook outweighed stronger, than the expected jobless claim numbers. The US jobless claims dropped to ...their lowest level in more than 52 years last week, as the labour market conditions continued to tighten amid an acute shortage of workers. Gold is trading at USD 1779.60/oz.

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Currency
The Rupee may open weaker against USD today, as the greenback rose against a basket of major currencies in early Asian trade today, as concerns... surrounding the Omicron variant of COVID-19 have waned. However, RBI’s intervention may curb any sharp movement in the pair. The Indian Rupee closed weaker at the 75.52 level against the US Dollar in the previous trading session.

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Sensex
58786.67
1.88%
During the week Sensex gained 1.88% to close at 58786.67 while Nifty advanced 1.82% to close at 17511.30
 
Bond Yields
6.37%
0 bps
The 10Y benchmark yield ended at 6.37% same as compared to the previous week.
 
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.