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| Indian Economic Update
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The Minutes of the Monetary Policy Committee's latest meeting, confirmed that a majority of the members are not ready to call the end ...of the rate hikes just yet. The members were of the opinion that the fall in inflation is transient, led by lower vegetable prices, while core inflation is sticky. Two members had voted against the rate hike, keeping the stance as 'withdrawal of accommodation'
The central government again clarified that the funds deposited for National Pension Scheme (NPS) cannot be given to state governments as per the current laws. Both the FM Ms. Nirmala Sitharaman and the Finance Secretary Mr. Vivek Joshi said that if any state is expecting that the funds deposited for NPS can be returned to them, then it is impossible
India’s FM Nirmala Sitharaman held a bilateral meeting with US Treasury Secretary Janet Yellen and discussed issues relating to crypto assets, strengthening multilateral development banks and global debt vulnerabilities
India is expected to pitch for focusing on issues relating to macroeconomic stability and inclusive growth at the upcoming meetings of G20 finance and foreign ministers that are taking place in the shadow of the Ukraine conflict.
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| Global Update
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The FOMC minutes showed that all members voted for a 25 bps rate hike while a few members favoured a higher increase of 50 bps. ...It stated that ‘upside risks to the inflation outlook remained a key factor shaping the policy outlook’.
The European Central Bank President Christine Lagarde said that the headline inflation has begun to slow down but they intend to raise the key rates by 50 bps at the upcoming policy meeting.
Geo-political tensions have increased after the North Korean government’s firing of ballistic missiles and the meeting between the US Secretary of State Antony Blinken and Chinese foreign secretary Wang Yi, that did not appear to diffuse tensions between the two nations.
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| Equity
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Benchmark indices remained steady this week amidst subdued Asian equity markets, however, it closed on the negative side. Hawkish ...FOMC minutes weighed on the sentiment. In addition, the MPC also highlighted underlying inflationary pressures in the economy.
During the week Sensex lost 2.52% to close at 59463.93 while Nifty decline 2.67% to close at 17465.80
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| Debt
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Government bond prices were steady during the week as participants were waiting for MPC minutes. Prices corrected after MPC minutes ...highlighted the continued inflationary pressures. Members agreed that the recent fall is transient in nature. This will weigh on the sentiment amidst elevated UST yields.
The 10Y benchmark yield ended at 7.38% as compared to the previous week’s close of 7.37%
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| Oil
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Oil prices traded higher after overnight sell-off as demand from the US and other advanced economies overshadowed the rapid ... recovery in China. The market has also shrugged off supply-side issues. Russia is planning to reduce exports from its western ports in March by about 25% from February. This comes following Russia’s announcement that it would cut oil output by 500,000 barrels per day in March in retaliation against western sanctions.
Brent was trading at $83.20 on February 24, at 16:10 IST
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| Gold
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Gold prices remained steady but stayed under pressure after better than expected PMI. Further, US FOMC minutes showed that a ...few participants favoured raising rates by 50 bps and continued increase in rates. Investors will look forward to US gross domestic product data and the core PCE price index ahead.
Gold was trading at $1822.40 Per Ounce on February 24, at 16:10 IST
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| Currency
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During the week, the pair (USD/INR) remained volatile. However, hawkish FOMC minutes ahead of US GDP and PCE data kept the ...downside limited for the pair. MPC minutes showed an April rate hike is on the table, which will support INR. Any sharp movement in the pair is unlikely on the back of expected RBI intervention.
USD/INR was trading at 82.75 on February 24, at 16:10 IST
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| Sensex |
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During the week Sensex lost 2.52% to close at 59463.93 while Nifty decline 2.67% to close at 17465.80
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| Bond Yields |
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The 10Y benchmark yield ended at 7.38% as compared to the previous week’s close of 7.37%
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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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