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Indian Economic Update
Rural India witnessed lower inflation in January with inflation for agricultural labour, CPI-AL at 4.6%, while inflation for rural labourers, CPI-RL stood at 4.7%
Commerce and Industry Minister has urged the Indian electronics and electrical industry to target USD 100 billion in exports over the next 5-7 years
During April-January 2025, the total number of ITR filers rose by 6.9% YoY to more than 90 million. Filers with income above INR 10 million increased to 32.1 million from 22.4 million in FY21
MPC minutes highlighted a stance supportive of growth and an expectation of Inflation aligning with the target driven by soft global commodity prices despite recent INR depreciation. Few members also noted that high real rates have kept monetary policy in the restrictive zone and interest rate defence of the currency in the current situation could be counter productive
IMD warns of record-breaking March heat; this unusual heat poses a serious threat to the maturing wheat crop, potentially reducing yields
The Centre’s dividend receipts from CPSEs have surpassed the revised estimate of INR 550 billion for FY25 by INR 50 billion and may reach INR 650 billion by year-end
The government has appointed Finance Secretary Tuhin Kanta Pandey as SEBI chief for a 3-year term.
Global Update
The US President has clarified that the tariffs on Mexico and Canada will be imposed on Mar 04, 2025. Further announcing that tariffs on the EU will be raised by 25% and an additional 10% tariff will be imposed on Chinese imports
The EU is broadening the list of US goods it will target with retaliatory tariffs, if the US President follows through on his threat to impose duties on steel and aluminium exports
The ECB minutes indicated that the decisions will be made on a meeting-by-meeting basis, with a bias towards easing policy. The minutes showed that members believed that tariffs would pose additional downside risks to growth.
Equity
- The benchmark indices traded with a negative bias through the week mirroring the losses seen in the Global markets. The markets remained subdued amidst continued FII selling and persistent global uncertainty. Investors are taking market cues from domestic GDP data, US tariff announcements and domestic and global macro-economic data.
- During the week, the Sensex lost 2.81 % to close at 73198.10, while the NIFTY declined 2.94 % to close at 22124.70
Debt
- Indian G-Sec yield remained flat for most of the week but increased late in the week, tracking the increase in UST Yields after the release of jobless claims and GDP data. Markets remain cautious and look to the release of US PCE inflation data and domestic GDP growth data to provide further guidance.
- The 10Y benchmark G-Sec was trading at a yield 6.72 % of on February 28, 2025 at 16:38 IST
Oil
- Oil prices traded mixed through the week with a negative bias. The fall was driven primarily by lowering geopolitical risk premiums and the prospect of easing of sanctions on Russia aided by easing demand in the US. US measures to stop operations in Venezuela and sanctions on Iran created upward pressure on prices.
- Brent was trading at $ 73.15 on February 28, 2025 at 16:38 IST
Gold
- Gold prices traded mixed through the week falling below the USD 2900 mark late in the week, as markets became cautious before the release of the US PCE inflation data, which could influence the Federal Reserve's rate-cut decisions The escalating trade tensions, market uncertainty and geopolitical risks continue supporting gold’s appeal as a safe-haven for investment.
- Gold was trading at $ 2863.41 Per Ounce on February 28, 2025 at 16:38 IST
Currency
- The USD/INR pair traded with a positive bias through the week, as the Indian Rupee weakened. The fall was driven by the dollar index moving higher as a response to risk aversion and tariff concerns. The RBI continues to intervene and stabilise the currency by limiting the fall in the Indian Rupee.
- USD/INR was trading at 87.51 on February 28, 2025 at 16:38 IST
February 28, 2025
Source: ICICI Bank Research, Private Banking Investment Strategy Team, Bloomberg and CRISIL.
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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.
