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Indian Economic Update
According to the monthly Economic Review released by the Finance Ministry, the inflationary pressures... in India appear to be on a decline with a pre-emptive set of administrative measures by the government, agile monetary policy and easing of international commodity prices and supply-chain bottlenecks

Aggregate demand is firm and poised to expand further as the festival season sets in, according to the Reserve Bank of India’s monthly bulletin for September 2022

Gross direct tax collections grew by 30% to INR 8.36 trillion till 17 September of the current fiscal year

The Centre has slashed the windfall tax on domestic crude by 21% to INR 10,500/tonne, in the fifth fortnightly review of the one-off tax on oil companies

Chief Economic Advisor Mr. AnanthaNageswaran, speaking at the Global Fintech Fest event, pegged India’s growth rate for FY23 at 7%, down from the 8% that was projected previously in January 2022

Union Cabinet approves the second tranche of INR 195 billion PLI scheme for the national programme on the high efficiency solar Photovoltaic (PV) modules as well as the new National Logistics Policy (NLP) to bring logistical efficiency in the economy and reduce the overall cost of freight movement.

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Global Update
The Federal Open Market Committee (FOMC) raised the federal funds rate by 75 bps to the 3% - 3.25% range pushing borrowing costs to the highest since 2008 ...

The Bank of England (BoE) raised its policy rate by 50 bps to 2.25%

Russian President Vladimir Putin declared a “partial mobilisation,” calling up 300,000 reservists, in a major escalation of his flagging invasion of Ukraine. He also renewed his nuclear weapons warning.

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Equity
Benchmark indices remained volatile during the week as investors were waiting for the monetary policy decision of the US Fed, Bank of Japan (BoJ), Bank of England (BoE)... and Swiss National Bank, which was due this week. However, after the hawkish guidance by the US Fed the equity indices traded lower

During the week Sensex lost 1.26% to close at 58098.92 while Nifty declined 1.16% to close at 17327.35

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Debt
The week opened with steady bond prices amidst the FOMC rate decision, as investors remained cautious, also the elevated UST yields continued to put pressure on the ...bond prices. The Fed rate hike announcement and the hawkish commentary added pressure to the government bond prices to trade lower.

The 10Y benchmark yield ended at 7.39% as compared to the previous week’s close of 7.23%

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Oil
Brent Crude oil prices were trading higher as the Chinese city of Chengdu ended a two-week lockdown, boosting the outlook for demand. ... a

Further, UAE said it was accelerating its plan to produce 5mbd of crude oil by 2025. Brent crude oil prices remained steady post fall after the Fed raised interest rates and signalled more aggressive monetary tightening, raising concerns about the outlook for energy demand.

Brent was trading at $88.62 on September, 23 at 15:42 IST

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Gold
Gold prices traded lower as investors were preparing for the rate hike. Inflation adjusted yields on Treasuries also rose, putting additional pressure on the precious ...metal. Post the rate hike, a strong USD and UST yields rising to historic levels increased the opportunity cost of non-yield-baring gold. At the end of week, gold traded higher supported by a pullback in USD.

Gold was trading at $1657.34 Per Ounce on September, 23 at 15:42 IST

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Currency
The USD/INR pair opened higher this week with cautious sentiments before FOMC decision. The demand of USD remained relatively strong. Expected RBI intervention continues ...to provide relief to the local unit.

USD/INR was trading at 80.99 on September, 23 at 15:42 IST

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Sensex
58098.92
-1.26%
During the week Sensex lost 1.26% to close at 58098.92 while Nifty declined 1.16% to close at 17327.35
 
Bond Yields
7.39%
16 bps
The 10Y benchmark yield ended at 7.39% as compared to the previous week’s close of 7.23%
 
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.