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| Indian Economic Update
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India’s WPI inflation eased to a 29-month low of 1.34% YoY in March (vs 3.85% in February) with a broad-based ...decline across food, energy and manufactured products.
The Monetary Policy Committee (MPC) minutes explained that the decision to pause was undertaken to account for the cumulative impact of earlier hikes that are yet to be transmitted to the domestic economy. Most members pointed out that effective interest rates have increased more than policy rates which will have an impact on growth.
Finance Minister Nirmala Sitharaman said the country could buy Russian crude oil near or past the price cap imposed by the G7 if the recent OPEC+ output cut increases energy costs
The Income Tax Department of India stated that there is currently no proposal before the government regarding the capital gains tax.
The government expects work demand under the Mahatma Gandhi National Rural Employment Guarantee Scheme to ease sharply in FY24 due to improved economic activities.
India reimposed a windfall tax on domestically produced crude oil at INR 6,400 per tonne and scrapped export duty on diesel. The export duty exemption for petrol and aviation turbine fuel (ATF) will continue.
The Indian economy would continue to be the fastest growing major economy in the world and is expected to grow at 6.5% in FY24 regardless of the cut in growth projections by multilateral lending agencies according to a member of the Economic Advisory Council to the Prime Minister.
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| Global Update
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Atlanta Federal Reserve President Raphael Bostic stated that the US Fed most likely has one more interest rate rise ...ahead as it continues to work to lower the high inflation.
The European Central Bank (ECB) chief economist Philip Lane backed a further interest rate increase at the ECB's next meeting and said the size would depend on incoming data.
China's GDP grew by 4.5% YoY in Q1 2023 from 2.9% in Q4 2022. The pick-up in growth can be attributed to the reopening of the economy that has resulted in a surge in pent-up demand while infrastructure spending remained strong.
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| Equity
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This week benchmark equity indices opened lower following weak quarterly performance by some of the large corporates.... Continued hawkish comments by the US Fed weighed on the sentiment. Fed’s Beige Book mentioned that the banking crisis in March took a toll on financial activity which may also weigh on the indices.
During the week Sensex lost 1.28% to close at 59655.06 while Nifty decline 1.14% to close at 17624.05
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| Debt
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The government bond prices opened lower this week as elevated UST yields weighed on the sentiment. Higher supply continues to put ...pressure on the long-end while short-end got the support.
The 10Y benchmark G-Sec was trading at a yield of 7.16% on 21 April, 2023 at 16:10 IST
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| Oil
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Oil prices traded in the lower territory despite a sharp decline in US crude inventories. Investors continued to fret about the prospect... that major central banks will raise interest rates further to bring down inflation hurting the outlook for economic growth and oil demand globally.
Brent was trading at $80.95 on 21 April, 2023 at 16:10 IST
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| Gold
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This week, gold opened flat as the USD rebounded and investors continue to adjust their expectations for the monetary policy ...and the economic outlook. The demand for UST bonds too has dropped significantly amid soaring bets for further policy restrictions by the Fed. A light calendar in the US and a cautious mood seem to underpin the yellow metal's prices of late.
Gold was trading at $1992.01 Per Ounce on 21 April, 2023 at 16:10 IST
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| Currency
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This week, the pair traded in a range as the greenback mostly opened flat. Hawkish comments by Fed officials and an upbeat ...earnings season continue to support the DXY. However, lower oil prices may provide support to some extent. Any sharp movement is unlikely given RBI interventions.
USD/INR was trading at 82.10 on 21 April, 2023 at 16:10 IST
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| Sensex |
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During the week Sensex lost 1.28% to close at 59655.06 while Nifty decline 1.14% to close at 17624.05
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| Bond Yields |
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The 10Y benchmark G-Sec was trading at a yield of 7.16% on 21 April, 2023 at 16:10 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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