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| Indian Economic Update
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India’s retail inflation fell to an 18-month low of 4.72% YoY in April from 5.66% in March mainly due to cooling food prices and a ...favourable base. Food inflation eased to 4.2% YoY, while core inflation too softened to 5.2% YoY.
WPI inflation declined to a 33-month low of (-)0.92% in April 2023 (vs 1.34% in March) as all three components (food, fuel & power and manufactured product) of WPI witnessed a deceleration from the previous month.
RBI Governor Shaktikanta Das said that the headline inflation easing to 4.7% during April is “very satisfying” and gives a good amount of confidence that the monetary policy is on the right track. He is optimistic that the actual growth figure will be close to RBI’s projection of 6.5% in FY24 at which it will contribute 15% to the world growth
Union Cabinet approved the revised Production Linked Incentive Scheme (PLI) for IT hardware to boost local manufacturing of products while increasing the budgetary outlay of the scheme to INR 170 billion from the previous provision of INR 73.25 billion
India’s industrial production growth slipped to a 5-month low of 1.1% YoY in March from 5.8% in February 2023 mainly due to poor performance of power and manufacturing sectors, according to official data.
S&P Global Ratings affirmed India's long-term foreign and local currency sovereign credit ratings at 'BBB-'.
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| Global Update
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A report from New York Fed stated, “downside risk to real activity has receded over the course of 2023 but remains elevated.” ...It also said upside risks to higher unemployment rose substantially last year but this year has also abated while still remaining “elevated”
Treasury Secretary Janet Yellen warns of a jump in US borrowing costs amid debt ceiling standoff. The Treasury’s borrowing costs have increased “substantially for securities maturing in early June”
The People’s Bank of China (PBOC) kept its medium-term lending facility unchanged at 2.75% while injecting more longer term liquidity into the local financial system.
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| Equity
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The benchmark equity indices opened higher amidst the mixed Asian equities along with the gains recorded in the US ... equity markets. However, the market traded lower as investors awaited negotiations on the US debt ceiling this weekend.
During the week Sensex lost 0.48% to close at 61729.68 while Nifty decline 0.61% to close at 18203.40
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| Debt
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The government bond prices opened lower as UST yields were a little higher after US inflation indicators were on a lower ...side than expected, investors weighed on economic and monetary policy. Participants remain cautious ahead of the auction (INR 330 billion) as supply pressures may limit the gains.
The 10Y benchmark G-Sec was trading at a yield of 6.99% on 19 May, 2023 at 15:52 IST
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| Oil
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Global crude oil prices continue to drift lower as physical markets remained oversupplied and as global risk aversion has... remained in place. We expect physical markets to tighten as OPEC production cuts are due to take effect from May 2023 onwards and Russia moves forward with plans to reduce supply. Ongoing bout of risk aversion reflecting global growth concerns, apprehensions about the US regional banking sector and anxiety about the US government’s debt ceiling could add to the downside bias towards Brent crude prices.
Brent was trading at $76.76 on 19 May, 2023 at 15:52 IST
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| Gold
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The week started with Gold prices trading higher following a weakened USD. The signs of progress on the US debt ceiling ...have provided some relief. This has resulted in some softening of the USD and UST yields too, underpinning the yellow metal prices.
Gold was trading at $1964.69 Per Ounce on 19 May, 2023 at 15:52 IST
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| Currency
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The USD/INR pair traded in a small range this week as the greenback trading is mixed after major economic indicators declined and... US debt ceiling discussions, as stated by Biden, are progressing forward. Falling oil prices may put pressure on the INR. However, any sharp movement is unlikely given RBI interventions.
USD/INR was trading at 82.67 on 19 May, 2023 at 15:52 IST
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| Sensex |
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During the week Sensex lost 0.48% to close at 61729.68 while Nifty decline 0.61% to close at 18203.40
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| Bond Yields |
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The 10Y benchmark G-Sec was trading at a yield of 6.99% on 19 May, 2023 at 15:52 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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