Quick Summary
Indian Economic Update
The November RBI bulletin pegs India’s Q2 growth at 6.7%, lower from MPC estimate at 7% and 7.6% for Q3... (MPC- 7.4%). The bulletin added that there has been a sharp surge in the momentum of food prices and core inflation has edged up.
According to the Periodic Labour Force Survey Quarterly Bulletin, unemployment rate in urban areas declined to 6.4% in September 2024 (v/s 6.6% in June). Labour force participation rate in urban areas increased to 50.4% in September 2024 (v/s 50.1% in June).
WPI inflation was 2.36% YoY in October 2024 (v/s 1.84% in September), a 4-month high driven by primary articles and manufactured products. Average wholesale inflation for the 7 months of FY25 stands at 2.13%.
The Chief Economic Advisor believes that inflation in October 2024 was primarily driven by key commodities like tomatoes, onions, potatoes, gold and silver, as these items which make up just 3.4% of the CPI basket, accounted for over one-third of the 6.2% inflation rate.
India’s Trade deficit widened to USD 27.1 billion in October (v/s USD 20.8 billion in September) led by higher oil deficit and gold imports. Merchandise exports stood at USD 39.2 billion (+17% YoY) and imports stood at USD 66.3 billion (+3.9% YoY), an all-time high. Net services exports stood at USD 17 billion (+17% YoY).
According to the Controller General of Accounts report, the Centre’s capex during the H1 of FY24-25 stood at INR 4.15 trillion (-15.4% YoY), necessitating a 52% growth in the H2 to achieve the budgeted target of INR 11.11 trillion.
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Global Update
The US Fed chair affirmed that the Fed policymakers still consider inflation to be ‘on a sustainable path to 2%’ that will... allow the Fed to move monetary policy ‘over time to a more neutral setting’ that isn't meant to slow the economy.
The number of Americans filing new applications for unemployment benefits fell to a 7-month low of 213k last week, suggesting that job growth likely rebounded in November.
The ECB Vice President indicated that further easing is likely, adding that the Central Bank needs to keep monitoring developments in the real economy.
Japan's economy expanded by an annualised 0.9% over Q3, due to tepid capital spending though an unexpected pickup in consumption.
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Equity
The benchmark indices traded flat through the week reaching a 5-month low as the FII selling continued. This decline ...is largely driven by the continued selling by FIIs, weak corporate earnings and a surge in domestic inflation to a 14-month high. DII buying has supported the markets.
During the week Sensex gained 1.98% to close at 79117.11 while Nifty moved up 1.59% to close at 23907.25
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Debt
10-year Government Bond yields opened flat, tracking UST yields as the investors focused on the MPC meeting to ...provide valuable cues to the market, fresh US data and Fed commentary, which will potentially influence the direction of bond yields. Escalating geopolitical tensions may trigger a flight to safety, leading to FPI outflows from Indian markets.
The 10Y benchmark G-Sec was trading at a yield of 6.88% on November 22, 2024 at 16:15 IST
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Oil
Crude oil prices opened lower but moved up sharply in the week as the Russia-Ukraine conflict intensified. The upside ...remains limited by the lower global demand growth forecasts from IEA and OPEC, surplus US inventories and the strengthening of the USD to a 2-year high creating downward pressure on oil prices. Geopolitical risks could continue to influence price movements.
Brent was trading at $74.40 on November 22, 2024 at 16:15 IST
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Gold
Gold prices traded with a positive bias through the week reaching a 2-week high as escalating tensions in the Russia-...Ukraine conflict bolstered demand for safe-haven assets. Despite the strengthening USD, a risk-on market environment and expectations of less aggressive policy easing by the US Fed, gold price uptrend remained unaffected.
Gold was trading at $2706.99 Per Ounce on November 22, 2024 at 16:15 IST
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Currency
The USD/INR pair remained flat through the week with a slight negative bias as the Indian Rupee grew weaker ...trading at an all-time low. Continued FII selling and a strong global USD trend with the dollar index reaching a 24-month high impacted the rupee. RBI continues to intervene and stabilise the currency to maintain range trading environment by limiting the fall in the Indian Rupee.
USD/INR was trading at 84.46 on November 22, 2024 at 16:15 IST
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SENSEX
79117.11
1.98
During the week Sensex gained 1.98% to close at 79117.11 while Nifty moved up 1.59% to close at 23907.25
BOND YIELDS
6.88%
The 10Y benchmark G-Sec was trading at a yield of 6.88% on November 22, 2024 at 16:15 IST