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Indian Economic Update
The Centre is considering increasing income support to farmers under the PM Kisan Scheme by up to 50% from INR 6,000 ...and stepping up the procurement under the Minimum Support Price to ensure that the rural income levels are not impacted.

The minutes of the Monetary Policy Committee (MPC) meeting earlier in the month showed that members were of the opinion that the recent spike in headline inflation was led by a sharp spike in vegetable prices and can be looked through if it does not become generalised.

RBI Governor Shaktikanta Das said that price stability is essential for maintaining the economic growth of the country. He added that while core inflation is still elevated at 4.9%, a steady decline in core inflation over the last five months is indicative of the ongoing transmission of the monetary policy.

The Employees Provident Fund Organisation added 1.79 million members in June 2023 with an increase of ~ 9.7% MoM.

The government imposed an export duty of 40% on onions with immediate effect to check price rise and improve supplies in the domestic market. This export duty, which is the first time ever on onions, is valid till December 31, 2023.

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Global Update
BRICS leaders agreed to admit new countries including Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates in a push... to expand its global influence.

Federal Open Market Committee officials continue to emphasise that the policy will remain restrictive, although there appears to be some divergence on the peak rate.

S&P Global Ratings downgraded its outlook citing a similar mix of pressures making life tough for lenders.

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Equity
Indices opened higher this week amidst the Asian markets performance. However, indices turned lower during the week as investors ...remained cautious ahead of the central banker’s comments at the Jackson Hole meeting including US Fed Chair Jerome Powell. We expect indices to remain lower tracking losses in the global peers amid a rise in UST yields.

During the week Sensex lost 0.10% to close at 64886.51 while Nifty declined 0.23% to close at 19265.80

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Debt
Bond prices traded in a short range during the week. UST yields rose as investors are cautious ahead of the Jackson Hole meeting... and RBI MPC minutes showed that RBI may need to be more stringent on the liquidity in order to curb inflation under brackets. In today’s session, participants will enter auction an of INR 330 billion with supply pressure from the longer end curve. We expect bonds to trade range-bound, given the light domestic calendar.

The 10Y benchmark G-Sec was trading at a yield of 7.21% on 25 Aug, 2023 at 15:45 IST

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Oil
Oil prices traded lower, reaching the lowest in three months as demand concerns of a restrictive monetary policy in US and economic slowdown ... of the top crude oil importer China continue. A report from EIA revealed that US crude inventories fell more than expected by 6.35 million bls last week, adding to the supply concerns. Investors remain focused on the annual economic symposium for further information on interest rates.

Brent was trading at $84.54 on 25 Aug 2023 at 15:48 IST

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Gold
Gold prices traded higher after a rebound from five-month lows as data from major economies revealed business activity to be ...softer than expected, raising expectations of a pause in the current interest rate hike cycle. Investors remain focused on the Jackson Hole symposium for further information on interest rates.

Gold was trading at $1916.68 Per Ounce on 25 Aug 2023 at 15:48 IST

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Currency
USD/INR traded in a tight range as the greenback traded higher due to upbeat in UST yields. Besides, IPO-driven inflows and a positive... tone in the domestic markets will support the upward move. However, softening of oil prices will aid the domestic unit but any sharp movement in the pair will be restricted by RBI intervention.

USD/INR was trading at 82.66 on 25 Aug 2023 at 15:48 IST

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Sensex
64886.51
-0.10%
During the week Sensex lost 0.10% to close at 64886.51 while Nifty declined 0.23% to close at 19265.80
 
Bond Yields
7.21%

The 10Y benchmark G-Sec was trading at a yield of 7.21% on 25 Aug, 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.