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Quick Summary
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Indian Economic Update
According to Commerce and Industry Minister Mr. Piyush Goyal, The country's services exports are doing "extremely well" and going ...by the current trend these outbound shipments would register about 20% growth in this fiscal and cross the USD 30 billion 0 target despite global economic uncertainties

India's crude oil imports rose to a five-month high in December as refiners stocked up discounted Russian fuel amid a steady increase in consumption in the country

Centre plans to reduce import duty on gold as higher taxes have made it more easier and profitable for smugglers as they can offer discounts thus denting the market share of banks and refiners

RBI announced inclusion of all Sovereign Green Bonds issued by the government in FY23 as “specified securities” under the FAR

Indian retail inflation for farm and rural workers sequentially eased to 6.38% YoY and 6.6% YoY, respectively, in December 2022

The India-UK free trade agreement (FTA) is expected to be clinched this year but it won’t involve any boost of free movement visa offers for Indians, British trade minister in charge of the negotiations commented

India's GDP growth rate is projected to moderate to 5.8% in 2023 from an estimated 6.4% in 2022 as higher interest rates and a global economic slowdown weigh on investment and export performance, the United Nations said this week.

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Global Update
Several FOMC officials provided further indications that the pace of rate hikes could slow in the next policy meeting. Fed ...Governor Waller stated that rates have reached a restrictive territory, and he backed moderation in the size of rate hikes

ECB President Ms. Christine Lagarde signalled that the bank would continue to increase interest rates this year amid an improved economic outlook and historically tight labour market

U.S. Treasury Secretary Janet Yellen said that, ‘There is an urgent need to reduce the debt burden of heavily indebted countries, warning that failure to do so would set back development in poor countries and could lead to more war, fragility and conflict.’

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Equity
The benchmark indices started trading higher on the first day of the week, tracking the gains in Asian equity market. Focus ...was on corporate earnings results. Investors are expected to remain cautious ahead of the Federal Reserve's meeting and the Union Budget next week.

During the week Sensex lost 2.13% to close at 59330.90 while Nifty decline 2.35% to close at 17604.35

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Debt
Government bond prices remained steady as participants await clarity on the borrowing numbers for the next fiscal year in the budget ...FY24. Until then, the yields will continue to take cues from global markets. Movement in UST yields will be closely monitored as the US government has breached its debt ceiling last Thursday. Thus, any negative reaction would weigh on the bond prices.

The 10Y benchmark yield ended at 7.39% as compared to the previous week’s close of 7.35%

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Oil
Brent crude oil prices have moved sharply higher over January supported by China's re-opening optimism. While China's crude oil... demand is rebounding, supply worries have increased ahead of the Russian product ban from February 5, 2023. Investors are waiting for more clarity on the impact of sanctions on Russia's supply.

Brent was trading at $88.52 on January 27, at 15:58 IST

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Gold
Gold’s prices traded flat as the USD rose and bond yields pushed higher. US business activity contracted for a seventh month. ...However, a measure of input prices firmed in a sign of lingering inflationary pressures.

Gold was trading at $1928.82 Per Ounce on January 27, at 15:58 IST

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Currency
During the week USD/INR pair remained flat. Slowdown concerns in the US economy as indicated by the latest bout data is weighing on ...the USD. The Fed member Waller supported slowing the next hike to 25 bps which weigh on USD. However, elevated oil prices may limit the gains. Any sharp movement in the pair is unlikely on the back of expected RBI interventions.

USD/INR was trading at 81.52 on January 27, at 15:58 IST

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Sensex
59330.90
-2.13%
During the week Sensex lost 2.13% to close at 59330.90 while Nifty decline 2.35% to close at 17604.35
 
Bond Yields
7.39%
4 bps
The 10Y benchmark yield ended at 7.39% as compared to the previous week’s close of 7.35%
 
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.