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Indian Economic Update
NITI Aayog Vice Chairman Mr. Rajiv Kumar, while speaking at an event, commented that India will see at least 10.5% GDP growth FY22 and can achieve 8%... GDP growth beyond FY22

India’s trade deficit jumped to an all-time high from USD 13.8 billion in August to USD 22.6 billion in September, reflecting a much higher sequential surge in imports than exports

Prime Minister Mr. Narendra Modi on Friday, addressed the nation and congratulated the country on achieving a major milestone of administering 100 crore vaccine doses. "100 crore Covid-19 vaccine doses is a landmark, not merely statistics, it's a new chapter in history," PM Modi said, while adding that the dutifulness of 130 crore Indians lies behind the vaccine feat

Global rating agency Moody's has upgraded the outlook on the Indian banking system from “Negative” to “Stable”, on the back of stabilising the asset quality and improved capital. The deterioration of the asset quality since the onset of the Coronavirus (COVID-19) pandemic has been moderate and an improving operating environment will support the asset quality. The level of problem loans for the rated banks has moved down from 8.5 per cent in FY19 to 7.1 per cent in FY21.

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Global Update
The Chinese Real Estate company - the Evergrande Group - based on the local state media reports is said to have paid the dues on the bond payment of USD 83.5 million that was due on .... The wire transfer will be made by Saturday. The company has met the timeline of making the payment within the 30-day grace period that should avoid a default in the near-term

The US Centres for Disease Control and Prevention COVID-19 booster shots from Moderna Inc. and Johnson & Johnson, that will pave the way for the third round of booster shots to be delivered

The Federal Reserve Bank of New York President, Mr. John Williams said, that inflation is within the Central Bank’s 2% longer-term target

People’s Bank of China Governor, Mr. Yi Gang stated that keeping a normal monetary policy and bank interest margin in a reasonable range can help the banking system drive economic growth and maintain financial stability

The U.S. economy expanded at a “modest to moderate rate” while some districts noted that the growth slowed down, citing supply constraints and concerns over the Delta variant, the Federal Reserve said. Price increases were driven by supply shortages, transportation bottlenecks and labour constraints, the U.S. Central Bank said in its Beige Book survey, released on Wednesday

Federal Reserve Governor, Mr. Randal Quarles said he favours an initial move to a slow monetary stimulus next month and is concerned by a broadening of inflationary pressures that could require a policy response. While Cleveland Federal Reserve President Ms. Loretta Mester said that the U.S. interest-rate hikes are not coming “anytime soon”, though U.S. Central Bankers will act if the inflation expectations became unmoored

The Federal Reserve should begin tapering its bond-buying programme next month, though interest-rate increases are probably “still some time off,” Fed Governor Mr. Christopher Waller said, “While there is still room to improve on the employment leg of our mandate, I believe we have made enough progress, such that the tapering of our asset purchases should commence following our next FOMC meeting, which is in two weeks,” Waller said

A spectacular rally in coal futures in China hit an abrupt halt as the Government began a policy blitz intended to tame prices and ease the nation’s power crisis. The National Development and Reform Commission said it aims to ensure coal output increases to 12 million tons a day and will give the fuel priority for deliveries through ports and over railroads. It’s also evaluating other measures to intervene in prices and has “zero tolerance” for those spreading false information or collusion in the market, according to a statement

China’s home prices fell for the first time in six years as a property slump deepens in the world’s second-largest economy. New-home prices in 70 cities, excluding state-subsidised housing, slid 0.08% in September from August, the first drop since April 2015, National Bureau of Statistics figures showed on Wednesday. Values in the secondary market declined 0.19%, down, for a second month

The Chinese economy slowed in Q32021, reflecting a hit from lockdowns that were imposed in August, slower property investments and a slower pace of growth in the industrial sector. China’s GDP slowed from 7.9% YoY in Q22021 to 4.9% YoY in Q32021 and from 1.2% QoQ in Q22021 to 0.2% QoQ in Q32021. We think that there could be a further slowdown in Q42021, as concerns about the Chinese Real Estate sector remain in place

The Bank of England gave another warning yesterday that it will raise interest rates amid the surge in the price of energy. Governor Andrew Bailey said that the increased inflation will last longer than previously expected, because of soaring gas bills and rising wages. He made it clear that the Bank 'will have to act and must do so if we see a risk, particularly to medium-term inflation'.

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Equity
Benchmark indices are expected to open in the green today, tracking the positive Asian equity markets as the Chinese conglomerate Evergrande’s payment of...overdue coupons boosted the investor sentiment. Moreover, the Chinese Government’s statement that it would loosen the control of property market also aided the sentiment.

During the week Sensex lost 0.79% to close at 60821.62 while Nifty declined 1.21% to close at 18114.90

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Debt
Government bond prices are expected to open steady ahead of the weekly debt sale worth INR 240 billion, scheduled today. The participants, however, may remain cautious ahead of the release of ...the RBI MPC’s minute of October policy meeting, later today. However, rising US Treasury yields could weigh on the prices.

The 10Y benchmark yield ended at 6.36% as compared to 6.32% of previous week

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Oil
Global crude oil prices are trading higher on continued tightness in the U.S. supply, but were headed for a flat finish in the week as coal and gas prices eased, curbing fuel-switching,... which had stoked demand for oil products for power. The market hit multi-year highs earlier in the week on worries about coal and gas shortages in China, India and Europe, which spurred fuel-switching to diesel and fuel oil for power. Brent crude prices are trading at USD 84.23 per barrel.

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Gold
Gold prices are trading higher, extending gains into a third session as a softer Dollar made the metal cheaper for buyers holding other currencies and the falling US real yields. The Federal Reserve... Governor Mr. Christopher Waller said that the next few months will be critical to see whether inflation is transitory, while the Federal Reserve Governor Randal Quarles and Cleveland Fed President Ms. Loretta Mester highlighted the inflation fears. Gold prices are trading at USD 1787.90 per ounce.

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Currency
The Indian Rupee may open weaker against the Dollar as the demand for greenback rose after the release of the US jobless claims data, which fell sharply, suggesting that a strong economic recovery... in the US remains in place. However, RBI’s intervention may curb any sharp movement in the pair. The Indian Rupee closed flat at the 74.86 level against the US Dollar in the previous trading session.

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Sensex
60821.62
-0.79%
During the week Sensex lost 0.79% to close at 60821.62 while Nifty declined 1.21% to close at 18114.90
 
Bond Yields
6.36%
4 bps
The 10Y benchmark yield ended at 6.36% as compared to 6.32% of previous week
 
Source: ICICI Bank Research, Private Banking Investment Strategy Team, Bloomberg and CRISIL.
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