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Indian Economic Update
India’s fertiliser subsidy bill is likely to shoot up by 55% to record INR 2.5 trillion this fiscal as the government will provide additional funds to make ...up for the spike in cost from higher import price, as per government sources

The Commerce Ministry has made a case for encouraging domestic manufacturing of 102 items like chemicals, electronic products and insulin injection as their share in the country’s total imports are high. As many as 88 items such as gold, natural gas, crude palm oil and integrated circuits have shown an increase in imports in the short, medium and long run.

While Western nations have imposed sanctions against Russia over the war in Ukraine, India has not explicitly condemned Moscow's actions there. The world's third biggest oil importer and consumer, India imports about 85% of its 5 million barrels per day (bpd) of oil needs. The call on Indian companies to explore buying the stake in Rosneft came after BP CEO Bernard Looney met Indian oil NSE -1.62 % minister Hardeep Singh Puri in March.

Commerce and Industry Minister Piyush Goyal said that the government is trying to reduce the compliance and regulatory burden so that it becomes easier to operate, grow and exit from businesses amid green shoots of investment coming back to India

A surge in exports and reports of a decline in production pushed mandi prices above the MSP and thus wheat procurement by the FCI and state government agencies has declined sharply 35% YoY to 15.3 metric tons as on yesterday

The Centre is looking to fast track the work to achieve its target to raise INR 1.62 trillion through asset monetisation in FY23. Cabinet secretary Rajiv Gauba has called a meeting today to discuss their detailed roadmap for monetising assets such as power lines, gas pipelines, roads and railway assets

India's FM Nirmala Sitharaman while addressing a roundtable on 'Investing in India's Digital Revolution' in San Francisco assured investors that the government will address any possible pain points to encourage investments in the country

India needs to act to sharply lower inflation level as the key price gauge has stayed above target for too long and is starting to hurt the economic recovery, Jayanth Varma, a member of RBI’s MPC said. Amid concerns that low growth and high inflation could coexist in the coming quarters, India’s rate-setting panel should also be ready to do whatever is required to achieve its goals, Varma said.

Ahead of the end of five-year assured compensation period on June 30, the Centre on Wednesday acknowledged that an amount of INR 787.04 billion was yet to be released to the state governments towards fully compensating them for their Goods and Services Tax (GST) revenue shortfall for FY22

The government will divest a 3.5% stake in LIC in the INR 902-949 price band in the IPO that will open on May 04, 2022. At the top end of the price band, the offer will raise INR 210 billion while at the lower end it will fetch the government about INR 200 billion with the valuation at INR 6 trillion for the country's biggest life insurer

CBDT Chairman said that the Net Direct Tax collections (Income Tax and Corporate Tax) reached an all-time high of INR 14.09 trillion in financial year FY22 against INR 9.45 trillion collections in FY21

The monthly GST collections is likely to peak to all-time high of INR 1.45-1.50 trillion as per media reports. In March the collections stood at INR 1.42 trillion which was up 6.8% MoM

India and the European Union (EU) on Monday decided to set up a trade and technology council to boost bilateral ties as the bloc’s president Ursula von der Leyen met India’s PM Narendra Modi here weeks before the two sides are to resume negotiations for a Free Trade Agreement (FTA) in June

The Board of Life Insurance Corporation of India (LIC) will meet today to consider the launch dates for the company’s Initial Public Offering (IPO). The Board will consider the proposal of the issue opening date of May 04 and closing date of May 09, an official said. Once approved by the Board, the issue dates, reservation and discounts would be announced on Wednesday and mentioned in the Red Herring Prospectus (RHP).

The Centre has procured 13.69 metric tons of wheat, a sharp 35% drop from the same period last year from 11 states till 24 April of FY23 rabi marketing year at the MSP for INR 275.92 billion. As per Industry sources, India may have to reconsider its decision to push wheat exports in a big way once the threshold of 6-7 metric tons is breached to prevent a sharp escalation in flour prices, triggered by a drop in procurement and estimates of lower-than-expected production.

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Global Update
US GDP growth contracted in Q1 by -1.4% vs 6.9% in the previous quarter. Higher imports and lower government spending lead the contraction. Private consumption ...and investment remained buoyant

President Joe Biden is seeking USD 33 billion in additional aid to Ukraine and new authority from Congress to seize and sell property linked to wealthy allies of President Vladimir Putin, as the Russian military intensifies its offensive

Shanghai reported its first increase in COVID-19 cases in six days, a setback for a city still in the midst of an unprecedented lockdown. The financial hub reported 9,970 infections and 52 deaths for Thursday, slightly up from 9,764 cases on Wednesday

Germany is now ready to stop buying Russian oil, clearing the way for EU ban on crude imports from Russia, government officials said. Berlin had been one of the main opponents of sanctioning the EU’s oil-and-gas trade with Moscow. However on Wednesday, German representatives to EU institutions lifted the country’s objection to a full Russian oil embargo provided Berlin was given sufficient time to secure alternative supplies, two officials said

European Commission President Ursula von der Leyen warned companies not to succumb to Russia’s demands to pay for gas in RUBs, as the continent scrambles for a united response to Moscow’s weaponisation of its energy resources

The ECB President Lagarde emphasised the central bank’s commitment on meeting its inflation mandate. She further re-affirmed that QE will end in July and that a possible rate hike might be possible sometime in the summer months of 2022 possibly July-August

China’s State Council pledged to promote the growth of internet platform firms and give cash handouts to poor people who have lost their jobs, stepping up efforts to bolster an economy under threat from COVID-19 outbreaks

The Chinese city of Hangzhou will start mass testing for COVID-19 as cases in Shanghai appear to moderating

The US Dollar Index (DXY) measured against a basket of G-10 currencies has reached a five-year high driven by monetary divergence between the FOMC and other G-7 central banks as well as concerns about a possible EU energy crisis

Russia said that it will stop supplying gas to Poland and Bulgaria on Wednesday reflecting a major escalation in the standoff between Russia and the EU. The move was undertaken on the refusal of the two EU member nations to pay in RUBs. The upshot is that a real risk of Russia choking its energy supply to the European region has increased considerably that is weighing on risk sentiment and the EUR

China’s President Xi Jinping made a bold commitment to boost infrastructure construction, the latest pledge by officials to bolster the economy that is taking a huge hit from the lockdowns that are being imposed

European Central Bank Governing Council member Martins Kazaks says the central bank should raise interest rates soon and has room for as many as three hikes this year

The PBOC cut the foreign exchange reserve ratio by 1% to 8% that will be applicable from May 15, 2022 to increase the supply of USD liquidity in the local markets to support the currency in the process. The PBOC also stated that it will step up the prudent monetary policy support to the real economy, especially for industries and small businesses hit hard by the pandemic

China’s capital Beijing has swiftly expanded its COVID-19 mass testing from one district this week to most of the city of nearly 22 million, adding to expectations of an imminent lockdown similar to the one imposed on Shanghai

The Bank of Korea should stay on the path to policy normalisation as inflation remains a more pressing concern than a slowdown in economic growth, Governor Rhee Chang-yong said

Russian Foreign Minister Sergei Lavrov warned that there’s a “serious” danger of nuclear conflict and said talks with Ukrainian negotiators will continue. His deputy met with the US ambassador in Moscow

China ordered mandatory COVID-19 tests in a district of Beijing and locked down some areas of the capital as policy makers raced to prevent a repeat of the outbreak that’s hobbled Shanghai for weeks. The intensification of lockdowns in China has worked to raise concerns about the growth outlook that is weighing on the CNY that has moved to its lowest level since April 2021

European Central Bank President Christine Lagarde said Sunday that while both the U.S. and Europe are struggling to contain soaring inflation, they are also “facing a different beast”

Secretary of State Antony Blinken and Secretary of Defence Lloyd Austin were in Kyiv late on Sunday night for talks with Ukrainian President Volodymyr Zelenskiy. This was the highest-level US visit to the war-torn country since Russia invaded.

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Equity
Benchmark indices are likely to open higher tracking gains in overnight US markets as strong tech earnings offset the unexpected Q1 US GDP print, which showed ...contraction against all expectations. Domestic earnings results to provide direction to today's price action as investors continue to monitor the Russia-Ukraine crisis.

During the week Sensex lost 0.23% to close at 57060.87 while Nifty declined 0.40% to close at 17102.55

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Debt
Government bond prices are likely to open lower ahead of weekly debt sale of INR 330 billion scheduled today. Participants may exercise caution before the... results of the auction.

10Y benchmark yield ended at 7.14% as compared to 7.16% of previous week

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Oil
Oil edged lower today as China’s COVID-19 lockdowns weighed on the outlook for crude demand although supply disruption fears as Western sanctions curb crude and... products exports from Russia underpinned prices. Brent is currently trading at USD 106.77/bbl.

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Gold
Gold is trading higher as the physical demand for the safe-haven asset jumped 34% YoY to 1,234 tonnes in the first three months of 2022, according to a report... by the World Gold Council released Thursday. Gold is currently trading at USD 1904.45/oz.

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Currency
The USD/INR pair is likely to open lower as the greenback retraced back from the high of previous session. Upcoming FOMC meet will be in focus to provide the... direction in the pair. IPO related foreign fund flows may support the local unit. However, any sharp movement is unlikely due to expected RBI interventions. The Indian Rupee depreciated to 76.66 level against the US dollar in the previous trading session.

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Sensex
57060.87
-0.23%
During the week Sensex lost 0.23% to close at 57060.87 while Nifty declined 0.40% to close at 17102.55
 
Bond Yields
7.14%
-2 bps
10Y benchmark yield ended at 7.14% as compared to 7.16% 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.