Quick Summary
Indian Economic Update
The Finance Minister of India said that the Government is focusing towards infrastructure spending, at CII’s Global Economic Policy Summit. The Finance Minister (FM) also... urged the private sector to be more risk-taking and invest, to sustain GDP growth, going forward

Headline WPI spiked to a 5-month high of 12.54% YoY in October vs. 10.66% last month, with a sequential rise of 2.28% MoM, driven by food (3.06%), fuel and power (37.18%) inflation

India’s Industrial Production (IIP) decelerated to 3.1% YoY in September compared to an increase of 12% YoY in August, led by base effect and more than anticipated moderation in mining and electricity, while the headline CPI inched up to 4.48% YoY in October (4.5% our estimate) compared to 4.35% YoY in September, led by a higher core and fuel and light inflation

The DIPAM Secretary said that the Government is planning to complete privatisation of six state-owned entities in FY22. This includes the Neelachal Ispat Nigam Ltd, BEML, Shipping Corp of India, Pawan Hans, Central Electronics and BPCL. He also mentioned that the Government expects the LIC IPO to take place in Q4FY22

The Cabinet approved the allocation of INR 64.7 billion towards a mobile tower project for providing 4G network services in the villages, across Andhra Pradesh, Chhattisgarh, Jharkhand, Maharashtra, and Odisha

The Cabinet approved a rural road connectivity project under the Pradhan Mantri Gram Sadak Yojana worth INR 338.2 billion for providing road connectivity to remote villages

Fitch affirmed India’s ‘BBB-’ rating and maintained the negative outlook. Fitch mentioned that the uncertainty around the medium-term debt trajectory along with the limited fiscal headroom relative to its rating peers are at the core to its rating assessment

The RBI Governor said, that underlying indicators pointed towards a recovery taking hold. He also mentioned that core inflation could remain elevated. About liquidity, he said that a lot of liquidity has been moved to VRRRs and will now subsequently move towards rebalancing of liquidity conditions

Foreign Direct Investment (FDI) into India was at USD 6.51 billion in September, against USD 4.93 billion a year ago. On a cumulative basis, FDI in April-September 2021 rose to USD 42.86 billion from USD 41.39 billion the year-ago period

Finance Minister Mrs. Nirmala Sitharaman said, that the Centre will give INR 950.82 billion in the devolution of central taxes on November 22, to ensure states have enough funds for capital spending.

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Global Update
The Biden administration has asked some of the world's largest oil consuming nations - including China, India and Japan - to consider releasing crude stockpiles, in a ... coordinated effort to lower global energy prices

China’s Evergrande Group plans to sell the rest of its stake in HengTen Networks Group Ltd. for USD 273 million. Evergrande will use the proceeds of the sale for general working capital

US President Joe Biden and Chinese leader Xi Jinping concluded their meeting. The two sides discussed a wide range of issues from Taiwan, to trade, to North Korea, Afghanistan and Iran. Meanwhile, China's state media described the meeting as "frank, constructive, substantive and fruitful”

US President Joe Biden said on Tuesday that he expected his “Build Back Better” legislation to be passed within a week’s time. The USD 1.75 trillion proposal aims to expand the social safety net in the United States and boost the climate change policy. He also indicated that an announcement on the next FOMC Chairman will be made in four to five days’ time

China’s Vice President Mr. Wang Qishan said, China and the world must work together to boost the global economic growth, vowing that Beijing will continue opening up more to foreign investment, at a time when more countries are raising barriers over their national security concerns

Fed officials continue to provide a divergent message on policy rates. Bullard continued to provide a hawkish message indicating that the pace of tapering should be accelerated and that policy rates should be hiked in response to the elevated inflation. At the same time, Fed member Mrs. Mary Daly said, that she was constructive on the outlook but that it would be premature to consider hiking the policy rates

Energy markets across Europe surged after Germany suspended the 2 Nord Stream gas pipelines that would double its reliance on Russian gas, following the growing geo-political pressure to scrap the project

Chinese property developer Kaisa Group appears to have missed coupon repayments for bonds that were due over Nov 11 - Nov 12, 2021. The company gets a grace period of 30 days before an official default can be declared

The ECB President said, that inflation should undershoot the 2% YoY in the medium-term as supply-side constraints ease, which should ensure that the monetary policy remains accommodative

US officials continue to downplay the medium-term inflation concerns. US Treasury Secretary said that controlling COVID-19 will be key to keeping a check on inflation. She stated that that inflation could moderate from H22022, onwards

PBOC Bank rolled over all the policy loans falling due this month, shoring up support for the economy amid mounting risks to growth. The PBOC has injected CNY 1 trillion (USD 157 billion) through its medium-term lending facility, matching the record amount maturing in November 2021

The president of COP26 said, that China and India will need to explain why they insisted a crucial passage of the UN brokered climate deal was changed at the last minute. The pact now refers to the “phase down” of coal, rather than the “phase out” of coal, as originally proposed.

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Benchmark indices are expected to open lower, given the weak global cues. Asian equity indices opened lower as fresh inflation data reignited fears of sooner... than-expected rate hikes and policy normalisation by global Central Banks. Further, US stocks saw a sharp overnight decline, as participants trimmed risks from their portfolios.

During the week Sensex lost 1.73% to close at 59636.01 while Nifty declined 1.86% to close at 17764.80

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Government bond prices are expected to open steady as market participants may refrain from placing large bets ahead of the INR 240 billion weekly gilt auction and may ...exercise caution due to a lack of significant cues, ahead of the extended weekend. Moreover, uncertainty over global interest rates amid rising inflation could also weigh on bonds.

The 10Y benchmark yield ended at 6.34% as compared to 6.37% of previous week

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Oil prices fell more than 3% broken below USD 80 per barrel for the first time in about two months, as traders weigh the potential strategic reserves release. The selloff... in oil comes as the Biden Administration is considering a coordinated move, in which consuming countries release oil reserves to curb a surge in energy costs and inflation. Brent crude prices are trading at USD 79.77/barrel.

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Gold prices edged up as the USD eased and UST yields retreated from a three-week high. Gold is trading at USD 1866.90 per ounce....

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The Rupee may open steady against the USD as the greenback weakened against a basket of major currencies as inflation in the UK and Europe surged, which shifted focus from the... three-decade high CPI print in the US for October. However, RBI’s intervention may curb any sharp movement in the pair. The Indian Rupee closed higher at the 74.32 level against the US Dollar in the previous trading session.

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During the week Sensex lost 1.73% to close at 59636.01 while Nifty declined 1.86% to close at 17764.80
Bond Yields
-3 bps
The 10Y benchmark yield ended at 6.34% as compared to 6.37% of previous week
Source: ICICI Bank Research, Private Banking Investment Strategy Team, Bloomberg and CRISIL.
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