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Quick Summary
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Indian Economic Update
The Monetary Policy Committee decided to increase the policy repo rate by 50 basis points ... to 5.90% with immediate effect. The inflation projection for 2022-23 is retained at 6.7%.

The real GDP growth for 2022-2023 (Apr-Mar) is now projected at 7.0% compared with 7.2% earlier

According to the income tax department, the net direct tax collection has increased 23% to INR 7.04 trillion so far this fiscal

Current Account Deficit for Q1FY23 stood at USD 23.9 billion (2.8% of GDP), from USD 13.9 billion in Q4FY22

Banking sector deposits outstanding stood at INR 170 trillion, posting a growth of 9.5% YoY

The Union Cabinet approved the extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for further three months (October 2022-December 2022), at an additional cost of INR 447.62 billion

The Commerce Ministry will extend the existing Foreign Trade Policy (FTP) (2015-20) by another six months, till March 2023.

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Global Update
The ECB president Ms. Christine Lagarde said the European Central Bank will boost interest rates over its next "several meetings"...

The GBP/USD pair has fallen to a record low after a slew of tax cuts that were announced by the new UK Chancellor Mr. Kwasi Kwarteng

Media reports indicated that Russia has continued to cut off the last gas pipeline to Ukraine’s European allies

The ECB will continue raising interest rates over the next few months at a pace dependant on the incoming economic data, said the Vice President of ECB.

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Equity
Benchmark indices opened lowered this week, tracking the subdued Asian Equity market. Investors were waiting for the Monetary ... Policy Commiittee (MPC) policy decision. Equity markets remain volatile during the week. However, after the policy rate announcement, indices witnessed a sharp recovery on Friday.

During the week Sensex lost 1.16% to close at 57426.92 while Nifty declined 1.34% to close at 17094.35

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Debt
India’s benchmark 10 year G-Sec started the week on a flat note. MPC decision kept the yields range bound during the week. The H2FY23 borrowing ...calendar came in-line with expectations. Overall gross borrowing stands at INR 14.2 trillion, lower by INR 100 billion from the budgeted estimates. Repo rate hike of 50 bps on Friday came on expected lines.

The 10Y benchmark yield ended at 7.40% as compared to the previous week’s close of 7.39%

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Oil
During the week, Brent crude oil prices remained volatile amidst slowdown concerns and the possibility of OPEC+ to cut crude ... output in its upcoming meeting on Oct 5, 2022. The EU announced a ban on European companies from shipping Russian oil to third countries above an internationally set price cap.

Brent was trading at $89.12 on September, 30 at 17:01 IST

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Gold
Gold prices traded lower under the pressure from a strong USD and surging UST yields. ...Investment demand for gold continues to drop, which is visible in the fresh flows in to ETFs.

Gold was trading at $1664.05 Per Ounce on September, 30 at 17:01 IST

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Currency
The USD/INR pair has broken to a record high reflecting an upward re-pricing of US terminal rate projections as ...markets have adjusted to the incremental hawkish guidance provided by the FOMC. Expected RBI intervention may continue to provide curb the sharp volatility in the pair.

According to finance minister Ms. Nirmala Sitharaman, the Indian rupee has held back very well against the USD compared to other currencies, the RBI and the Government are keeping a very close watch over the developments.

USD/INR was trading at 81.35 on September, 30 at 17:01 IST

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Sensex
57426.92
-1.16%
During the week Sensex lost 1.16% to close at 57426.92 while Nifty declined 1.34% to close at 17094.35
 
Bond Yields
7.40%
1 bps
The 10Y benchmark yield ended at 7.40% as compared to the previous week’s close of 7.39%
 
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.