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Quick Summary
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Indian Economic Update
India’s CPI inflation on a 3-month high of 6.52% YoY in January vs 5.72% in December, led by both food at 6.2% YoY and core inflation at 6.1% YoY ...

India’s Index of Industrial Production (IIP) increased by 4.3% YoY in December 2022, led by manufacturing at 2.6% (6.4% in November)

Gross Direct Tax Collections for FY23 till February 10, 2023 stands at INR 15.67 trillion, growing 24.09% YoY

Union Government to allow an additional borrowing limit of about 0.3% of Gross State Domestic Product to states in FY24, to cover their annual contribution to the National Pension System (NPS)

According to Commerce Ministry data, India's imports from Russia have jumped about five times to USD 37.31 billion in FYTD23, on account of increasing inbound shipments of crude oil from that country

Union Government has released INR 8.08 trillion to the states as their share in taxes in April-February, Finance Minister Ms. Nirmala Sitharaman said in the Lok Sabha

India’s exports dipped by 6.58% YoY to USD 32.91 billion in January due to a slowdown in global demands, even as the trade deficit touched a 12-month low of USD 17.75 billion during the month.

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Global Update
Federal Reserve officials continued to indicate that policy will remain tight with a bias to do more if required, contingent on inflation trends. ...The New York Fed President stated that the Fed funds rate would be in the range of 5% and 5.5% by December 2023

European Central Bank Vice President, Luis de Guindos said that incoming economic data will determine the path for borrowing costs, following next month’s planned half-point increase

The Biden administration plans to sell more crude oil from the Strategic Petroleum Reserve, fulfilling budget directives mandated years ago that it had sought to stop, as oil prices have stabilised. The congressionally mandated sale will amount to 26 million barrels of crude.

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Equity
Benchmark indices opened flat this week, in a subdued Asian equity market. Investors are assessing the impact of Japan’s ...widening trade deficit and strong US retail sales data. Thus, a more hawkish Fed going ahead, will weigh on the sentiment.

During the week Sensex gained 0.53% to close at 61002.57 while Nifty gained 0.49% to close at 17944.20

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Debt
Government bond prices opened flat this week. Elevated US CPI prints pushed UST yields higher, which weighed on domestic bond prices. Higher ...than expected domestic CPI prints are also likely to continue to weigh on the local bond markets.

The 10Y benchmark yield ended at 7.37% as compared to the previous week’s close of 7.36%

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Oil
Oil prices rose sharply after Russia said it would lower production (500K barrels per day) in response to sanctions. This comes after... refined oil products were sanctioned by Europe, earlier this month. The cut to Russia’s output is expected to tighten the market just as the market suffers from other supply-side issues. Exports of Azerbaijan oil from Turkey remain curtailed, following the devastating earthquake. This halt has wiped out shipments of about 600K barrels per day. The US announced that it would release 26 million barrels of oil from the Strategic Petroleum Reserve (SPR). This is in addition to a record sale of 180 million barrels of oil, last year. Stronger than expected, US inflation was not a help either.

Brent was trading at $83.21 on February 17, at 16:01 IST

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Gold
Gold prices plunged after the release of stronger than expected US inflation numbers. After strong US labour data, the elevated ...inflation is reasserting that the Fed needs to stay hawkish for longer.

Gold was trading at $1825.06 Per Ounce on February 17, at 16:01 IST

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Currency
USD rose in the overnight session post the release of US CPI figures but has corrected. Participants await comments from the ...Fed members to provide further cues. Higher oil prices may also weigh on the local unit. Any sharp movement in the pair is unlikely on the back of expected RBI interventions.

USD/INR was trading at 82.83 on February 17, at 16:01 IST

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Sensex
61002.57
0.53%
During the week Sensex gained 0.53% to close at 61002.57 while Nifty gained 0.49% to close at 17944.20
 
Bond Yields
7.37%
1 bps
The 10Y benchmark yield ended at 7.37% as compared to the previous week’s close of 7.36%
 
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.