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Quick Summary
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Indian Economic Update
India’s CPI fell to a 3-month low of 5.02% YoY in September (vs. 6.8% in August) led by a sharp decline in vegetable prices. ...Core inflation too fell to 4.5% YoY (vs 4.8% YoY in August) with deceleration being visible in both goods and services.

Industrial production rose to a 14-month high of 10.3% YoY in August 2023 (6% YoY in July) due to a broad-based acceleration seen across segments.

The IMF raised India’s GDP growth forecast for FY24 by 20 bps to 6.3%, mainly due to stronger-than-expected consumption during the April-June quarter. India’s GDP forecast for FY25 is unchanged at 6.3%.

RBI Governor Shaktikanta Das said that RBI may use Open Market Operation sale of government papers to manage liquidity. He also mentioned about the phased withdrawal of I-CRR ending on October 7 as part of RBI’s liquidity management exercise.

India's gross direct tax collection increased by 18.0% to INR 11.0 trillion in the period from April 1 - October 9, 2023 according to the Ministry of Finance.

India’s urban unemployment rate fell for the second consecutive quarter in Q1FY24 to 6.6% from 6.8% in the previous Q4FY23 according to the periodic labour force survey data, reflecting a sustained improvement in labour markets.

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Global Update
US CPI inflation remained unchanged at 3.7% YoY in September 2023 although it was higher than the expected 3.6%. On... MoM basis, headline inflation rose by 0.4% MoM higher than the 0.3% expected.

The IMF lifted its global inflation forecast for the next year and called for Central Banks to keep the policy tight until there is a durable easing in price pressures. The fund also raised its US growth projection for this year by 0.3 percentage points compared with its July update to 2.1%.

Oil prices surged as much as 5% after the attack on Israel threatened to inflame tensions in the Middle East, the source of around a third of the world’s crude oil.

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Equity
The benchmark equity traded negatively at the start of the week. However, indices remained in line with the Asian Market after ...overnight gains in US equity market as USD yields dropped. Domestic inflation and industrial output data should drive the indices upside.

During the week Sensex inclined 0.44% to close at 66282.74 while Nifty gained 0.50% to close at 19751.05

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Debt
During the week, the government bond yields traded lower after the UST traded lower. Liquidity surplus of INR 167 billion in ...the market should affect the short-term yields. The mood in the government bond markets could be bearish moving in sync with UST that is trading higher after the US CPI. Meanwhile, domestic inflation came in at 5.02% YoY and it will provide some support to the IGB market participants. Participants will enter into the auction of INR 340 billion with supply pressure from the longer-term bonds.

The 10Y benchmark G-Sec was trading at a yield of 7.31% on 13 Oct, 2023 at 15:45 IST

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Oil
Oil prices traded lower and fell over 2% as fears of disruption to supplies due to conflict in the Middle East receded a day after ... the top OPEC producer Saudi Arabia pledged to help stabilise the market. US EIA forecasted a 200,000 bpd decrease in global oil inventories for H2 2023 due to voluntary Saudi output cuts and reduced production goals within OPEC+.

Brent was trading at $89.33 on 13 Oct, 2023 at 15:59 IST

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Gold
Gold prices traded higher as investors gauged the monetary policy outlook and the FOMC minutes. The dovish signals from the Federal ...Reserve, lower treasury yields and the war in the Middle East raised demand for gold.

Gold was trading at $1900.65 Per Ounce on 13 Oct, 2023 at 15:55 IST

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Currency
The USD/INR pair is expected to trade higher as USD strengthened following the US CPI, which came more than expected and could ...raise concerns for further rate hike from the US Central Bank along with risk aversion in global markets. The RBI could intervene if there is any sharp movement in the pair.

USD/INR was trading at 83.27 on 13 Oct, 2023 at 15:59 IST

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Sensex
66282.74
0.44%
During the week Sensex inclined 0.44% to close at 66282.74 while Nifty gained 0.50% to close at 19751.05
 
Bond Yields
7.31%

The 10Y benchmark G-Sec was trading at a yield of 7.31% on 13 Oct, 2023 at 15:45 IST
 
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.