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| Indian Economic Update
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India’s wholesale price-based inflation deflated for the third straight month as it contracted to 4.12% YoY in June vs. a contraction ...of 3.48% YoY in May, the Commerce Ministry data showed. In June last year, it was 16.23% YoY.
The Asian Development Bank retained forecast for India's economic growth at 6.4% YoY for this fiscal year and 6.7% YoY for the next. According to them the robust domestic demand will continue to support the region's recovery.
According to the data, India's merchandise trade deficit in June narrowed to USD 20.13 billion from USD 22.12 billion in May, as merchandise exports fell 22% YoY to USD 32.97 billion (vs. USD 42.28 billion a year earlier), while imports declined 17.48% YoY to USD 53.1 billion in June compared to USD 64.35 billion a year ago.
The Centre started selling tomatoes at INR 80 per kg from Sunday, as against INR 90 per kg earlier to provide relief from high prices in retail markets. Tomato wholesale prices have fallen in Delhi after the Government ordered fresh supplies from Andhra Pradesh, Karnataka and Maharashtra but the prices of other vegetables have risen because of the disrupted supply.
With downside risks to global growth still persisting, Finance Minister Nirmala Sitharaman urged G20 counterparts and Central Bank Governors to coordinate to work on an international approach to navigate this challenging period.
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| Global Update
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World Bank President Ajay Banga said that India has come out strong from the challenges posed by the pandemic but the momentum ...needs to be maintained. He added that the high percentage of GDP that comes domestically has worked in India’s favour.
US Leading Economic Index, a measure that anticipates future economic activity, declined by 0.7% in June to 106.1 following a revised decrease of 0.6% in May.
Japan's core inflation stayed above the Central Bank's 2% target in June for the 15th straight month.
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| Equity
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During the week, the benchmark equity indices remained largely positive as the Asian equities traded higher after the better-than...-expected earnings result and persistent foreign institutional buying that supported the indices. Domestic indices are likely to trade with a positive bias with a focus on Q1 earning season.
During the week Sensex gained 0.94% to close at 66684.26 while Nifty gained 0.93% to close at 19745.00
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| Debt
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Government bond prices opened higher this week as 10-year UST rose by 5 bps on the back of lower-than-expected US consumer ...and wholesale inflation numbers. Prices were lower after the 10-year UST fell by 5 bps to 3.740% after UK inflation fell to 7.9% prompting another rate hike of 50 bps by the Bank of England. This will weigh on the US Federal Reserve meeting next week. Given the light domestic calendar, bond prices will be trading range bound.
The 10Y benchmark G-Sec was trading at a yield of 7.10% on 21 July, 2023 at 15:45 IST
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| Oil
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During the week, Brent crude oil traded in short range amid the impact on oil output in Libya along with Russia’s crude shipments... falling to a six-month low in July and Saudi Arabia's exports down by 0.5 mbpd in July. Both indicate a tighter supply outlook in the near term. Brent crude oil is expected to trade in range with focus on China's stimulus.
Brent was trading at $80.65 on 21 July, 2023 at 15:47 IST
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| Gold
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Gold prices traded flat post a sharp rally last week supported by a weak USD and lower bond yields. A weaker-than-expected US inflation... print triggered sell-off in USD supporting gold prices. However, it traded higher post an overnight fall amid USD strength and higher UST bond yields. The initial jobless claims came lower-than-expected indicating strength in the US market and driving UST yields higher. Gold prices will consolidate in the near term with focus on UK retail sales data today.
Gold was trading at $1964.03 Per Ounce on 21 July, 2023 at 15:47 IST
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| Currency
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USD/INR pair traded lower as the greenback was trading lower after lower-than-expected US jobless claims data. We expect the pair... to trade with slight negative bias ahead of the FOMC meeting in the coming week. However, the surge in domestic equities and steady foreign inflows may support the rupee at a lower level. Meanwhile, rising oil prices may weigh on the pair and any sharp movement will need intervention by RBI.
USD/INR was trading at 81.96 on 21 July, 2023 at 15:47 IST
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| Sensex |
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During the week Sensex gained 0.94% to close at 66684.26 while Nifty gained 0.93% to close at 19745.00
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| Bond Yields |
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The 10Y benchmark G-Sec was trading at a yield of 7.10% on 21 July, 2023 at 15:45 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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