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Indian Economic Update
India’s Retail Inflation in August slowed down to 6.83% YoY, 61 bps lower in comparison to the 15-month high of 7.44% YoY in ...July, driven by food prices. This was largely led by vegetables, amidst some moderation in the prices of clothing and footwear, housing and miscellaneous items

India's industrial output in July 2023 increased by 5.7% YoY from 3.7% in June 2023. The mining output for July 2023 rose to 10.7% YoY, while the manufacturing sector output grew by 4.6% YoY. Electricity output also registered a growth of 8% YoY

The Centre’s interest-free loan disbursement to state governments for asset-creating projects has reached INR 0.5 trillion or 54% of the sanctioned amount so far in the current financial year, supporting the strategy to frontload capex to support economic growth

The government has exempted imports of LPG, liquefied propane and liquefied butane from the 15% Agri-cess, with effect from Friday

Gold imports by India, the world’s second-biggest consumer, surged about 40% in August on strong festive buying

According to the Secretary, Department for Promotion of Industry and Internal Trade, Rajesh Kumar Singh, India is looking at easing foreign direct investment rules in the space sector, to attract overseas players

India is expected to approve investment proposals worth INR 40 billion under the revised IT Hardware Production Linked Incentives Scheme.

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Global Update
US CPI rose 3.7% in August (vs 3.2% in July) led by a spike in energy prices. CPI rose 0.6% MoM in August (vs 0.2% in July) and... core CPI (excluding food and energy costs) rose by 0.3% MoM in August (vs 0.2% MoM in July)

Two major cities in eastern China lifted all curbs on home purchases and selling, joining several other cities in dropping restrictions to attract buyers and revive a largely frozen property market

ECB increased its key interest rate by 25 bps to 4%, the 10th consecutive rate hike since July 2022. However, the ECB also signalled that it was likely done with the tightening policy, suggesting a pause and potential rate cuts in the second half of next year.

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Equity
The benchmark equity indices opened higher this week, after the US tech shares rallied overnight in the equity market. Investors’ ...sentiments rose as Fed is expected to pause rate hikes. Given the inflows of FII and positive domestic cues, the indices are expected to remain positive.

During the week Sensex gained 1.86% to close at 67838.63 while Nifty advanced 1.88% to close at 20192.35

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Debt
Government bond yields remained flat as finance ministry prepares for an interim budget early next year, with expectation of centre ...overshooting its fiscal gap threshold. This will likely put upward pressure on short term bond yields with the present tightened liquidity condition and with centre opting for additional sales of T-bills to plug a potential fiscal slippage. Inflation at 6.8% YoY will provide some support to the IGB market participants, although rising crude prices could work as a bearish factor. Moreover, discontinuation of ICRR by RBI and release of extra liquidity in tranches will support the bond prices, ahead of the festive season.

Debt: The 10Y benchmark G-Sec was trading at a yield of 7.14% on 15 Sep, 2023 at 15:45 IST

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Oil
Oil prices traded higher, surging to their highest this year, as expectations of tighter supplies outweigh worries of weaker ... economic growth and rising crude inventories. China's central bank announced its second reserve ratio cut of 2023 to support economic recovery. Additionally, investors expect that the Fed will keep the rates steady in the next policy meeting. However, ECB raised its interest rates to an all-time high to control inflation.

Brent was trading at $93.94 on 15 Sep, 2023 at 15:54 IST

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Gold
Gold prices traded higher, rebounding from a fall as the dollar became stronger and yields performed better, due to strong US data. ...Retail sales and producer price index came in hotter than expected, raising worries about interest rates which are likely to stay higher for longer. Investors await more US data for further insights into price movements.

Gold was trading at $1939.15 Per Ounce on 15 Sep, 2023 at 15:55 IST

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Currency
The USD/INR pair traded flat, given the consolidation witnessed in global USD. However, upbeat crude oil prices led by... tighter supply outlook, will likely weigh on the Rupee. Any sharp movement in the currency will be restricted by RBI’s persistent intervention.

USD/INR was trading at 83.15 on 15 Sep, 2023 at 15:56 IST

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Sensex
67838.63
1.86%
During the week Sensex gained 1.86% to close at 67838.63 while Nifty advanced 1.88% to close at 20192.35
 
Bond Yields
7.14%

The 10Y benchmark G-Sec was trading at a yield of 7.14% on 15 Sep, 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.