Quick Summary
Indian Economic Update
According to the annual Reserve Bank of India census, Foreign Direct Investment in India increased
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by 23.3% in FY24, supported by valuation gains and fresh inflows. The US remains the largest source followed by Mauritius, Singapore & the UK.
India's index of industrial production contracted by 0.1% YoY in August due to the statistical base effect along with higher rainfall (+4.7% YoY in July). Manufacturing & Consumer Durable sector output saw an increase of 1% YoY and 5.2% YoY respectively. Mining, Electricity & Non-durables sector output contracted by 4.2% YoY, 3.7% YoY and 4.5% YoY respectively.
Net Direct Tax collections were recorded at INR 11.25 trillion (+18.35% YoY) as on October 11. It included Corporate Tax of INR 4.94 trillion and Income Tax of INR 5.98 trillion. Gross Tax collection was INR 13.57 trillion (+22.3% YoY).
India's retail inflation was at 5.49% YoY in September (3.65% in August), a 9-month high while wholesale inflation was at 1.84% YoY (1.31% in August).
Food & beverage inflation rose to a 3-month high of +8.4% YoY (+5.3% in August) while core inflation rose to +3.5% YoY (+3.4% in August). Momentum was driven by an uptick in vegetable prices (+3.5% MoM) & edible oil prices (+2.9% MoM).
India’s merchandise exports grew marginally to USD 34.58 billion (+0.5% YoY) in September. Trade deficit fell to the lowest level in 5 months at USD 20.78 billion, as import growth was modest at USD 55.4 billion (1.6% YoY). Lower imports were driven by a decline in gold imports at USD 4.3 billion (USD 10 billion in August).
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Global Update
Citing recent data showing an uptick in inflation, a stronger US economy and labour market, the Federal Reserve
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Governor called for "more caution" on the pace of interest rate cuts ahead, while calling for a gradual cut in policy rates over the next year.
The ECB cut the deposit rate again by 25 bps to 3.25% while providing a balanced outlook, indicating that future decisions would remain data-dependent and that monetary policy is not on a pre-set course.
The Chinese economy grew by 4.6% YoY (expectations: 4.5%) in Q3-2024 from 4.7% recorded in Q2-2024 confirming that momentum is slowing and reflecting a soft private demand and headwinds from the property sector.
The Bank of Japan policymakers indicate that the bank must raise interest rates at a "very moderate" pace and avoid hiking prematurely, warning that further Yen rises and slowing global demand may weigh on inflation & wage growth.
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Equity
The benchmark indices opened slightly positive but continued their downward momentum through the week. ...Higher-than-expected domestic inflation & a weakness in global markets due to the ongoing volatility impacted the domestic market. Investors are focused on upcoming corporate earnings and US economic data, which will provide valuable insights into the market direction.
During the week Sensex lost 0.19% to close at 81224.75 while Nifty moved down 0.44% to close at 24854.05
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Debt
10-year Government Bond yields opened slightly lower tracking UST yields as investors assessed the developments
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in the global market. The yields closely tracked UST through the week with a slight upward bias. Ongoing Foreign Institutional investor selling has put pressure on IGB yields.
The 10Y benchmark G-Sec was trading at a yield of 6.91% on October 18, 2024 at 15:38 IST
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Oil
Crude Oil prices opened lower and tracked downwards through the week. Weak economic data from China and
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Israel’s commitment to not target the Iranian oil infrastructure created significant downward pressure. OPEC+ revised its global demand expectations lower for FY2025 & FY2026, pushing prices lower. OPEC+ announced production cuts later in the week creating supply pressure which moved prices slightly upwards.
Brent was trading at $74.06 on October 18, 2024 at 15:47 IST
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Gold
Gold prices opened slightly lower but traded positively through the week reaching an all-time high of USD 2700/oz.
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Expectations of rate cuts by major central banks and the ongoing geopolitical risks added to the demand for the safe-haven asset supporting the upward price movement.
Gold was trading at $2727.90 Per Ounce on October 18, 2024 at 15:47 IST
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Currency
The USD/INR pair traded flat through the week. Increase in FII outflows to China and volatile crude prices impacted
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the INR. Increased demand for gold in the festive season is creating further USD outflows. The RBI continues to intervene and stabilise the currency to maintain a range-trading environment.
USD/INR was trading at 84.06 on October 18, 2024 at 15:45 IST
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SENSEX
81224.75
-0.19%
During the week Sensex lost 0.19% to close at 81224.75 while Nifty moved down 0.44% to close at 24854.05
BOND YIELDS
6.91%
The 10Y benchmark G-Sec was trading at a yield of 6.91% on October 18, 2024 at 15:38 IST