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| Indian Economic Update
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India’s monetary policy minutes showed that committee members are optimistic about the growth momentum and some believe... the economy’s potential growth rate may have increased.
The monetary policy minutes suggest that members would want to wait for more information on the global monetary cycle and monsoon which should be available in June (change in stance) followed by a shallow rate cut cycle from August or October
India negotiates trade and investment agreements with fairness and an open mind and takes care of the interest of people, said Commerce and Industry Minister Piyush Goyal.
The RBI in its monthly bulletin stated that the Indian economy is sustaining the momentum achieved in the first half of the current fiscal year, with the investment cycle gaining steam driven by sustained government capex, rising capacity utilisation, increased flow of resources to the commercial sector and policy support from schemes like production linked schemes.
The government has increased the authorised capital of the Food Corporation of India (FCI) by 110% to INR 210 billion from INR 100 billion. The move has been taken to minimise the borrowings of the FCI and enhance its operational capabilities.
The number of beneficiaries under the Pradhan Mantri Ujjwala Yojana, a scheme that aims at providing LPG connections with subsidies to poor households, has crossed 100.1 million.
The government has decided to extend the benefits under the 'Remission of Duties or Taxes on Export Products' scheme to export-oriented units and manufacturers in the special economic zones (SEZs) to improve their competitive edge in the world market.
As per HSBC flash composite PMI, India's private sector activity rose to a seven-month high of 61.5 in February vs 61.2 in the previous month, owing to faster expansion in order books and slower increase in input prices.
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| Global Update
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China's central bank left a key policy rate—the marginal lending facility unchanged as expected. However, PBOC cut the benchmark... five-year loan prime rate for the first time since June by 25 bps to 3.95%, while leaving the one-year tenure unchanged at 3.45% respectively.
Eurozone wage growth rose 4.5% at the end of 2023, slowing for the first time in 18 months, according to the European Central Bank.
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| Equity
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The benchmark equity traded higher following the US and Asian markets touching an all-time high. The FOMC minutes provided ...relatively unchanged guidance on policy rates that will have a limited impact on the market while robust domestic demand will continue to ensure an influx of FPI flows.
During the week Sensex gained 0.99% to close at 73142.80 while Nifty inclined 0.78% to close at 22212.70
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| Debt
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Government bond yield traded flat following the UST trends. Liquidity remained in significant deficit. Domestic investors also... waited for the minutes of the RBI monetary policy committee. The RBI has largely favoured a liquidity deficit in the banking system since August.
The 10Y benchmark G-Sec was trading at a yield of 7.07% on 23 Feb, 2024 at 15:45 IST
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| Oil
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Oil prices were range bound as markets continued to fret over a weaker outlook for demand, while fears of supply disruptions from a ... sustained conflict in the Middle East remained in play. We maintain our global demand-side projections for crude for 2024 reflecting sluggish global output while supply should be supported by robust production from Non-OPEC members.
Brent was trading at $82.75 on 23 Feb, 2024 at 16:00 IST
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| Gold
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Gold prices have retreated after reaching a one week high. Gold prices have fallen further reflecting guidance from the FOMC minutes... that an immediate pivot to rate cuts is unlikely to take place. US jobless claims data indicated a strong economy, while investors awaited further economic data for guidance on the US Fed interest rate stance.
Gold was trading at $2028.90 Per Ounce on 23 Feb, 2024 at 16:01 IST
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| Currency
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The USD/INR pair traded in line with DXY, with the central bank likely to buy the greenback to prevent excessive volatility in the... exchange rate and to fill its foreign exchange buffer. The rupee closed at a 5-month high as foreign banks sold the greenback for foreign fund inflows into the domestic debt market.
USD/INR was trading at 82.93 on 23 Feb, 2024 at 16:01 IST
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| Sensex |
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During the week Sensex gained 0.99% to close at 73142.80 while Nifty inclined 0.78% to close at 22212.70
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| Bond Yields |
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The 10Y benchmark G-Sec was trading at a yield of 7.07% on 23 Feb, 2024 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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