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Indian Economic Update
WPI inflation softened to a 22-month low of 4.95% YoY in December from 5.85% in November, led by sharp deceleration in food inflation ...

Government of India cuts windfall tax on domestic crude production to INR 1,900 per tonne in the latest fortnightly revision of taxes

The RBI in its January 2023 bulletin said that India will maintain its position as the fifth largest economy in 2023. It further added that macroeconomic stability is getting stronger with falling inflation

India's crude oil imports from Russia increased further in December 2022, topping 1 million BPD for the first time ever as Moscow remained its top oil supper for the third month in a row

The government said that it has set a coal production target of more than one billion tonnes (BT) for the next financial year.

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Global Update
Japan’s inflation hit 4% for the first time in more than four decades, an outcome likely to keep speculation of a monetary... policy change smouldering as prices grow at twice the pace targeted by the Bank of Japan

Most FOMC officials continued to emphasise that policy rates will be slowed further while the pace might moderate going forward

According to Chinese officials, China's economy will likely rebound to its pre-pandemic growth trend in 2023 after coronavirus infections passed their peak.

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Equity
The benchmark indices started trading higher on the first day of the week tracking the gains in Asian equity market. However the ...indices turned negative as lower than expected US retail sales data weighed on sentiment as recession concerns grew. Domestic corporate earnings continued to provide intermediate direction.

During the week Sensex gained 0.60% to close at 60621.77 while Nifty gained 0.4% to close at 18027.65

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Debt
Benchmark yield remained steady during the week. Muted UST yields provided some support. Participants are awaiting ...the upcoming budget for FY24 to provide further cues regarding fiscal deficit and borrowing figures for the next fiscal. Higher supply pressure will continue to weigh on bond prices. Expectations of continuation of a large borrowing programme like the current fiscal will keep the yields range bound.

The 10Y benchmark yield ended at 7.35% as compared to the previous week’s close of 7.30%

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Oil
Oil prices are trading lower but continues to remain supported. China crude oil imports rose to 48 metric tons in December, ... up by 2.8% MoM. This is likely to continue with Beijing issuing a fresh batch of import quotas, a signal that the world’s largest importer is ramping up to meet higher demand.

Brent was trading at $86.48 on January 20, at 16:06 IST

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Gold
Gold’s prices traded sideways as supported by USD weakness, amid signs that the Fed is becoming less hawkish with 25 bps ...increase expected in the next policy. The support also came from strong buying from Central Banks. Both investment and physical demand are likely to remain supportive for 2023. China’s reopening sets the stage for resilience in the buying of physical gold.

Gold was trading at $1930.64 Per Ounce on January 20, at 16:06 IST

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Currency
During the week USD/INR pair remained volatile. USD remained supported, given the dovish outcome of BoJ monetary decision. In ...addition, rising oil prices amidst upbeat China mobility weighed on INR. Any sharp movement in the pair is unlikely on the back of expected RBI interventions.

USD/INR was trading at 81.13 on January 20, at 16:06 IST

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Sensex
60621.77
0.60%
During the week Sensex gained 0.60% to close at 60621.77 while Nifty gained 0.4% to close at 18027.65
 
Bond Yields
7.35%
5 bps
The 10Y benchmark yield ended at 7.35% as compared to the previous week’s close of 7.30%
 
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.