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| Indian Economic Update
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India’s Consumer Price Index inched up to 6.1% YoY in February, as compared to 6.0% YoY in January. Food inflation increased to 5.9% YoY (vs. 5.4% YoY last... month), while core inflation (excluding food and fuel) was stable at ~6% YoY
India’s WPI inflation for February increased by 13.1% YoY from 13.0% YoY in January. With this, FYTD22 WPI has averaged at 12.7% YoY. WPI food inflation decelerated to 8.5% YoY, led by the decline in vegetable inflation. Fuel and power index declined marginally to 31.5% YoY, despite a monthly increase of 4.4% MoM vs. -0.4% MoM last month, led by higher oil prices. Manufactured products’ inflation increased to 9.8% YoY vs. 9.4% YoY last month, primarily led by the uptick in base metals
According to media reports, India may import as much as 15 million barrels of crude from Russia in 2022
India’s Commerce and Industry Minister Mr. Piyush Goyal said that as per the feedback received from the industry, exports of certain products, such as pharmaceuticals, telecom instruments, tea, coffee, and marine goods from India, are likely to be affected, due to the ongoing Russia-Ukraine conflict
Over INR 536 billion of GST compensation for the current fiscal is yet to be released to the States, India’s FM Mrs. Nirmala Sitharaman said in the Rajya Sabha session. So far this fiscal, INR 966 billion has been released to the States, on account of GST compensation
Minister of State for Finance, Mr. Pankaj Chaudhary said that they are keeping a close watch on evolving geopolitical developments and would make ‘calibrated interventions’ to keep fuel prices under control
The Department for Promotion of Industry and Internal Trade (DPIIT) on Monday notified the Government decision to allow 20% FDI in IPO-bound LIC
As per the third batch of supplementary demands for grants tabled in the Lok Sabha, approval is being sought for gross additional expenditure of over INR 1.58 trillion. The Government sought Parliament’s nod for net additional spending of over INR 1.07 trillion, including about INR 150 billion towards fertiliser subsidy
The Finance Ministry said that INR 546 billion worth of loans were guaranteed under the Emergency Credit Line Guarantee Scheme (ECLGS) for micro, small, and medium enterprises, till the end of February in FY22, which is down from INR 1.57 trillion worth of loans guaranteed in FY21. The number of guarantees issued stood at 2.16 million in FY22 against 9.04 million in FY21
RBI’s Deputy Governor, Michael Patra, said that the Central Bank might review its forecast for growth and inflation at its next policy meeting, as the global economy feels the ripple effects of Russia’s war on Ukraine. He further added that India is on a much stronger wicket to face the fallout of global liquidity, tightening Russia's invasion of Ukraine and rising crude and commodity prices, as compared to 2013. Stable FDI alone can fund the current account deficit, besides having more fiscal headroom
India's economic recovery from COVID-19 is progressing well, with better-than-expected growth rates, and the trajectory will continue. However, persistently high oil prices can play spoilsport, MPC’s member Ashima Goyal said on Sunday
India’s Industrial Production (IIP) increased by 1.3% YoY in January compared to an increase of 0.7% YoY (revised upwards) in December, on the back of low base. The acceleration in January was led by mining and manufacturing. Electricity output decelerated
LIC could go public in April instead of March as decided earlier, three officials aware of the change in plans said, as the ongoing market volatility makes the Government wary of rushing India’s largest Initial Public Offering
India is not facing any power crisis as the installed electricity generation capacity stood at 395.6 Gigawatts (GW) against the peak demand of 203 GW recorded in FY22, said Power Minister R K Singh in a written reply to the Rajya Sabha on Thursday.
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| Global Update
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The FOMC hiked rates by 25bps on expected lines, pushing the fed funds rate from 0% to 0.25% range and from to 0.25% to 0.50% range, amid the ongoing inflationary concerns.... The FOMC also gave a hawkish guidance in its post policy statement on the timing of QT by stating that it could commence at a ‘coming meeting’, while dot plot signals an aggressive rate hiking path
Outrage over Russia's invasion of Ukraine grew on Thursday as US and Ukrainian officials said that civilians waiting in line for bread and sheltering in a theatre had been killed by the Russian forces. Meanwhile, Ukraine's Zelenskiy asks US Congress to 'protect our sky' against Russia
WHO says the global rise in COVID-19 cases is the 'tip of the iceberg'. Figures showing a global rise in COVID-19 cases could herald a much bigger problem, as some countries also reported a drop in their testing rates, the WHO said on Tuesday, warning nations to remain vigilant against the virus
Media reports indicate that Saudi Arabia will consider accepting CNY payments for oil sold to China that will, in theory, work to reduce the demand for USD in the medium term
The ECB President reiterated her message that the Central Bank will do whatever is required to ensure that there is price stability. The ECB Vice President Luis de Guindos said that ending asset purchases does not imply that rates will rise, immediately
President Joe Biden will travel to Brussels next week to meet with the NATO allies, and take part in a summit of European Union leaders
The US and China described their first high-level in-person talks, since Russia’s invasion of Ukraine, as “substantial” and “constructive,” respectively, although neither announced any specific outcomes. At the same time, the Chinese Finance Minister said that China wants to avoid being impacted by the US sanctions, over Russia’s war
Russia has started the payment process of two bond coupons, due this week. The Finance Ministry issued an order to pay Eurobond holders USD 117 million, although it didn’t specify if the payment is in USD, the currency they were issued in, or RUB
Chinese Policymakers have continued to lockdown cities and provinces, given the sharp rise in COVID-19 infection. The province of Jilin along with the cities of Shenzhen, Langfang and Dongguan are under lockdown, while cases are rising across the country. Lockdowns in China could result in supply-chain disruptions that might drive inflation higher, with a lag
Iran said it carried out a missile strike in northern Iraq and suspended talks on restoring diplomatic ties with Saudi Arabia, days after international negotiations on the Iranian nuclear deal stalled
China placed the 17.5 million residents of the southern city of Shenzhen into a lockdown for at least a week, seeking to halt a growing COVID-19 outbreak in a move that could cause disruption and production delays in the key technology hub and port.
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| Equity
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Benchmark indices are trading higher tracking gains in the Asian equity markets, as the FOMC delivered a hawkish commentary on expected lines. Now, focus... is on the development between Russia-Ukraine, along with rate decision of BoE and BoJ.
During the week Sensex gained 4.16% to close at 57863.93 while Nifty advanced 3.94% to close at 17287.05
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| Debt
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Government bond prices are likely to open steady, due to the lack of any significant domestic cues. Moreover, in the absence of any extra hawkish surprise, the... prices will trade range-bound.
10Y benchmark yield ended at 6.77% as compared to 6.86% of previous week.
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| Oil
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Brent prices fell below USD 100/bbl amidst hopes of progress in the Russia-Ukraine peace talks, an increase in US inventories and virus-related lockdowns... in China. Brent crude is currently trading at USD 99 per barrel. |
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| Gold
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Gold prices steadied after the US Fed raised interest rates in a widely expected move. Gold is currently trading at USD 1936.20 per ounce.... |
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| Currency
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The USD/INR pair is likely to open in lower, today. The DXY remained muted as the Fed hiked the rate by 25 bps, along the expected lines. Any sharp movement is unlikely,... due to expected RBI interventions. The Indian Rupee appreciated to 76.02 level against the US Dollar, in the previous trading session. |
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| Sensex |
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During the week Sensex gained 4.16% to close at 57863.93 while Nifty advanced 3.94% to close at 17287.05
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| Bond Yields |
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10Y benchmark yield ended at 6.77% as compared to 6.86% of previous week.
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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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