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Indian Economic Update
India’s Net Direct Tax collection till June 17, 2023 rose by 11.18% YoY to INR 3.8 trillion on higher Advance Tax mop-up,... said the Finance Ministry. The Advance Tax collections for the Q1 FY24 stood at INR 1.16 trillion (till June 17), reflecting a growth of 13.7% over the same period last fiscal.

The India Meteorological Department said that India’s stalled monsoon is likely to gain momentum in the next 3-4 days and could cover key rice, soybean, cotton and sugarcane growing regions in the southern, central and western states.

US President Joe Biden and Indian Prime Minister Narendra Modi announced a series of defence and commercial deals designed to improve military and economic ties between the two nations.

Formal job creation under the Employees’ State Insurance Scheme registered a growth of 2.8% MoM in April with the addition of 1.78 million net new employees compared to 1.73 million formal workers added in March.

India’s crude oil imports rose 2% to 20 million tonnes in May but sharply low prices dragged down the import bill by 34%, data from the Petroleum Planning & Analysis Cell showed.

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Global Update
Chinese Banks followed the Central Bank by lowering their benchmark lending rates. The one-year and five-year loan prime ...rates were reduced by 10 bps each, to the 3.5% and 4.2% marks respectively.

US President Joe Biden stated that progress was made in restoring US-China ties after Secretary of State Antony Blinken wrapped up two days of meetings in Beijing, including talks with Chinese President Xi Jinping.

In the semi-annual testimony to Congress, Fed Chair Powell clarified that higher interest rates would be required, given the inflation outlook and tight labour market conditions. He re-affirmed that a further 50 bps increase is cumulatively possible while the timing of the rate hikes could be contingent on the manner in which the economy evolves.

The BoE raised policy rates by 50 bps from 4.5% to 5.0% which was against expectations of a 25 bps hike, while providing a hawkish guidance by stating that ‘more tightening may be required if inflation pressures remain persistent’.

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Equity
This week, the benchmark equity indices remained volatile tracking the Asian and US equity markets. US Fed Chair Jerome Powell ...forecast more rate hikes this year saying, “the process of getting back down to 2% has a long way to go.” The hawkish comments have supported risk-off sentiments across equity markets. Benchmark indices are likely to consolidate at all-time high levels.

During the week Sensex lost 0.64% to close at 62979.37 while Nifty decline 0.85% to close at 18665.50

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Debt
The week started with higher bond prices as the cut-off for G-Sec auction came stronger for short-end while long duration found ...less demand. The debt market continued to price higher terminal rates driven by inflation concerns. Investors are likely to look forward to progress in the monsoon. IGB prices will trade lower given higher global yields in the near term.

The 10Y benchmark G-Sec was trading at a yield of 7.07% on 23 June, 2023 at 15:45 IST

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Oil
During the week, oil prices traded in a small range as global economic uncertainties continued to weigh on the demand... outlook. Prices remained flat post an unexpected draw in US crude oil stocks against the prospect of weaker demand after the Federal Reserve Chairman hinted at further interest rate hikes.

Brent was trading at $73.53 on 23 June, 2023 at 15:48 IST

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Gold
This week, gold traded lower and hit a 3-month low price. The prices traded lower as a slew of interest rate hikes and a more... hawkish outlook by major Central Banks turned out to be a key factor that continues to act as a headwind for the non-yielding Gold price. More downside is possible in the near-term.

Gold was trading at $1927.75 Per Ounce on 23 June, 2023 at 15:50 IST

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Currency
USD/INR pair traded in a tight range this week. The hawkish comments from Fed Chair Powell combined with ...higher-than-expected UK CPI, are supporting the US Dollar. RBI intervention could work to limit the sharp upside momentum in the near term. We expect the Rupee to trade range-bound in the near term.

USD/INR was trading at 82.02 on 23 June, 2023 at 15:49 IST

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Sensex
62979.37
-0.64%
During the week Sensex lost 0.64% to close at 62979.37 while Nifty decline 0.85% to close at 18665.50
 
Bond Yields
7.07%

The 10Y benchmark G-Sec was trading at a yield of 7.07% on 23 June, 2023 at 15:45 IST
 
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.