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Indian Economic Update
The Ministry of Home Affairs (MHA) has extended the Covid-19 guidelines issued under the Disaster Management Act till Feb 28, 2022 and urged states/Union territories... not to lower their guards, as cases decline, but new variants continue to emerge

The government has announced that national carrier Air India has been officially handed over to the TATA Group of Companies with the strategic disinvestment process

The IMF revised India’s GDP growth for FY22 to 9% from 9.5% earlier on the concerns over the impact of curbs imposed to check the latest Omicron variant on business activity and mobility

Formal job creation under the Employees State Insurance Corporation fell by 17.1% to 1.02 million in November 2021 against 1.23 million in the previous month

Former NITI Aayog Vice Chairman Mr. Arvind Panagariya is of the view that the Indian economy has largely recovered from the disruptions caused by Covid-19 pandemic. However, only private consumption is still below its pre-pandemic level. Expressing hope that the economic recovery will be sustained, Panagariya exuded confidence that the GDP growth rate of 7-8% will be restored again

The prices of Covishield and Covaxin could be capped at INR 275/dose, with an additional service charge of INR 150, once the two Covid-19 vaccines get regular market approval from the drug regulator, according to media reports

Communications and IT Minister said that the Telecom Department will not interfere in matters related to mobile phone manufacturing. His comments came amid the industry's apprehensions that there could be heavy regulations if the Department of Telecom decides to control the mobile manufacturing activities

Lok Sabha and Rajya Sabha to meet at separate times of the day for five hours each, to ensure Covid-19 distancing norms during the Budget Session beginning Jan 31, 2022

India has a target of USD 500 billion exports for FY23, according to media reports quoting government officials; alongside a target of 300 billion services exports in FY23

The Confederation of Indian Industry (CII) has suggested that GoI include an additional 1% corporate social responsibility levy, apart from the mandatory 2% for one year in the upcoming Budget to encourage corporates to spend on providing Covid vaccine booster shots.

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Global Update
ECB Governing Council member Mr. Olli Rehn says that the euro area will not see a sustained acceleration in inflation unless wages rise and that pickup feeds... into prices. At the same time, ECB Governing Council member Mr. Peter Kazimir stated that inflation should peak in the next few months, as supply-side disruptions are fading

U.S. President Joe Biden and Ukrainian President Volodymyr Zelenskiy talked about new ways to bolster Ukraine’s economy. The US President is set to have a call with his German counterpart in a month’s time, to discuss the situation between Russia and Ukraine

Russia stated that it was clear the United States was not willing to address its main security concerns in their standoff over Ukraine, but both sides kept the door open to further dialogue. The United States and NATO submitted written responses on Wednesday to Russia's demands for a redrawing of post-Cold War security arrangements in Europe since it massed troops near Ukraine, prompting Western fears of an invasion and new U.S. pledges of defense support

The FOMC provided a hawkish guidance. The post policy statement indicated that a rate hike in the next policy meeting in March 2022 was highly likely. At the same time, the FOMC Chair reinforced that message to the market by expressing concerns about inflation and stating that a rate hike at every meeting during 2022 was possible to tackle high inflation. The FOMC Chair also indicated that QT could be employed later in 2022 and a decision on this front could be made over the next two policy meetings

The US has handed over its written response to Russia’s security demands, the latest step in the high-stakes diplomacy over Moscow’s build-up of more than 100,000 troops on Ukraine’s border. At the same time, eight hours of talks between Russia and Ukraine, along with France and Germany, produced agreement to meet again in two-weeks

The IMF lowered its global growth projections for 2022 responding to the impact of the Omicron wave, lower US fiscal policy support and ongoing supply-side disruptions that have remained in place. Global growth was expected to moderate from 5.9% YoY in 2021 to 4.4% YoY in 2022 lower than previous projections of 4.9%

In response to Singapore inflation rising to an 8-year higher, the Monetary Authority of Singapore (MAS), in an unscheduled meeting, tightened policy by ‘“raising slightly the rate of appreciation” of the main currency band, while keeping its width and center unchanged. This was the first unscheduled action since 2015

Shimao Group Holdings Ltd. has put 34 projects across China up for sale, as the embattled developer seeks to raise billions of dollars amid mounting debt repayment pressures while China Evergrande Group urged offshore bondholders not to adopt aggressive legal action over repayments and asked for more time to make a risk disposal plan, after a group of overseas creditors threatened enforcement measures

The North Atlantic Treaty Organisation said it would boost its deployments in Eastern Europe in a bid to deter a new Russian invasion in Ukraine as the Pentagon announced it has put 8,500 troops on heightened alert. Russian President Vladimir Putin has denied he is planning an attack

Australia’s core consumer prices came in at 2.6% YoY in Q42021 surpassing the midpoint of the Reserve Bank’s 2-3% target for the first time since June 2014, raising expectations of the RBA moving towards policy normalisation

U.S. Secretary of State Antony Blinken rejected pressure to immediately escalate sanctions on Russia for its military buildup around Ukraine, saying it would limit western options in the future, although he did warn that an invasion on Ukraine would be met with a severe response. At the same time, the US government ordered families of diplomats out of Ukraine, citing the continued threat of Russian military action.

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Equity
Benchmark indices are likely to open higher tracking global markets. Key Asian indices opened on a positive note today, tracking gains in the US... stock futures after strong earnings lifted investor sentiment.

During the week Sensex lost 3.11% to close at 57200.23 while Nifty declined 2.92% to close at 17101.95

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Debt
Government bond prices may open lower as market participants may trim holdings ahead of INR 240 billion weekly gilt auction amid weak appetite for dated... securities. Traders may also place short bets on the 6.54%, 2032 bond ahead of the fresh supply at the weekly debt sale.

10Y benchmark yield ended at 6.77% as compared to 6.62% of previous week

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Oil
Oil is headed for a sixth straight weekly gain, with prices trading near the highest level in seven years, on signs of rising demand. Investors are concerned... about a possible Russian invasion of Ukraine, which could roil energy flows. Attention will shift next week to the Organization of Petroleum Exporting Countries and its allies as they meet on Feb 02, 2022 to assess the market and decide on supply policy. Oil is currently trading at USD88.29/barrel, lower by 0.45%.

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Gold
Gold prices are trading lower in early U.S. trading on Thursday, in the wake of a more-hawkish-than-expected Federal Reserve meeting and following ... some upbeat U.S. economic data—both of which have helped push the U.S. dollar index to a one and a half year high today. It is currently trading at 1798.0 USD/ounce, higher by 0.27%

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Currency
Rupee may open steady against USD, as the greenback was steady against major currencies in early Asian trade today, after yesterday’s gain on the back of a... strong US growth data that reinforced expectation for monetary policy tightening by the Federal Reserve. However, RBI’s intervention may curb any sharp movement in the pair. The Indian Rupee closed weaker at the 75.07 level against the US dollar in the previous trading session.

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Sensex
57200.23
-3.11%
During the week Sensex lost 3.11% to close at 57200.23 while Nifty declined 2.92% to close at 17101.95
 
Bond Yields
6.77%
15 bps
10Y benchmark yield ended at 6.77% as compared to 6.62% of previous week
 
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.