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| Indian Economic Update
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CPI inflation came in at 5.55% YoY in November vs. 4.87% YoY in October led by deceleration... in core inflation even as food inflation rose again.
India's industrial production in October reached a 16-month high of 11.7% (6.2% YoY in September 2023 and -4.1% YoY a year ago).
The Asian Development Bank (ADB) raised its FY24 growth forecast for India to 6.7% from 6.3% announced three months ago. It has retained its FY25 growth forecast for India at 6.7%.
India's National Statistical Commission is examining a working group report on the roadmap for introducing Producer Price Index (PPI) to replace the Wholesale Price Index (WPI). PPI includes both goods and services used by producers, while WPI is based only on goods.
The Centre’s dividend receipts from the Central Public Sector Enterprises (CPSEs) have crossed INR 390 billion so far, which is over 90% of the target for the current financial year, boosting its non-tax receipts.
India’s logistics costs have come down to below 9% of GDP, helped by rising state spending on roads, ports and digitisation, a report commissioned by the central government showed.
Capital expenditure on National Highways has seen a significant increase from about INR 510 billion in FY14 to more than INR 2.4 trillion in FY23, said the Union Minister of Road Transport and Highways.
Wholesale inflation turns positive at +0.26% YoY in November 2023 vs. -0.52% in October led by a sharp jump in food inflation.
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| Global Update
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The FOMC maintained status quo on policy rates and QT on expected lines. However, the post policy statement made several changes... that would suggest a mild dovish tilt in terms of guidance.
US CPI, printed in at 3.1% YoY in November vs 3.2% YoY in the past month reflecting 0.1% MoM increase vs 0.0% MoM in the previous month.
Britain's economy shrank in October, official data showed on Wednesday, raising the risk of a recession and testing the Bank of England's resolve to stick to its tough anti-inflation line against cutting interest rates from their 15-year high.
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| Equity
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The benchmark equity indices traded higher this week following the US market. Dovish commentary from US Fed supported the market. India's IIP... data came in at a 16-month high. Fall in crude oil prices and high FII buying are expected to support the market in a positive trajectory going forward.
During the week Sensex inclined 2.37% to close at 71483.75 while Nifty gained 2.32% to close at 21456.65
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| Debt
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Government bond yields turned lower following the UST post the status quo by Fed. The guidance provided by the FOMC was much more... dovish than expected particularly via the dot plot and the subtle changes made in the policy statement. Continuous pause of policy rate by RBI amidst slowing inflation rate should support the yields.
The 10Y benchmark G-Sec was trading at a yield of 7.16% on 15 Dec, 2023 at 15:45 IST
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| Oil
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During the week, oil prices traded in a volatile range. Prices traded higher led by softer USD because of dovish guidance from the FOMC. Drop in US... inventories also signalled towards a positive demand.
The International Energy Agency said evidence of softening global oil demand is mounting and a slowdown is expected to continue into 2024, reaffirming a starkly different outlook with oil-producing group OPEC.
Brent was trading at $77.10 on 15 Dec, 2023 at 16:15 IST
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| Gold
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The week started with lower gold prices as stronger US labour data pushed yields higher. Prices turned positive after dovish Fed comments led to a fall in... UST yields and softer USD. Overall, prices for the yellow metal continue to remain high supported by expectations of US coming to the end of its rate hike cycle and increase in quantum of rate hikes in 2024.
Gold was trading at $2043.96 Per Ounce on 15 Dec, 2023 at 16:15 IST
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| Currency
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USD/INR pair traded in line with the dollar index as the Fed interest rate remained the same at 5.5%. The rupee ended at a new record closing... low against the dollar on the back of constant demand for the greenback from importers. Investors expect the RBI to continue selling the dollar to prevent runaway depreciation.
USD/INR was trading at 83.00 on 08 Dec, 2023 at 16:15 IST
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| Sensex |
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During the week Sensex inclined 2.37% to close at 71483.75 while Nifty gained 2.32% to close at 21456.65
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| Bond Yields |
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The 10Y benchmark G-Sec was trading at a yield of 7.16% on 15 Dec, 2023 at 15:45 IST
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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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