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Indian Economic Update
The Indian government stated that it ‘neutralised’ Pakistani drone and missile attacks targeting several military sites
India’s forex reserves rose for an 8th consecutive week and stood at an over 6-month high of USD 688.13 billion as of April 25, USD 17 billion, shy of the record high of USD 704.89 billion achieved in September 2024
RBI reported a significant increase in gold reserves, standing at 2x of 2021 levels. As of March-end, gold constitutes 11.7% of the total reserves with the Central Bank holding 879.59 tons of gold
India’s Finance Secretary believes that India’s real GDP in FY26 will grow between 6.3% and 6.8%, likely surpassing the IMF's forecast of 6.2%
The US government has not yet agreed to several requests to exempt India from sectoral tariffs, especially the 25% tariff on steel and aluminium. In return, India planned to provide a proposed trade deal between the two nations
RBI's FY25 dividend payout to the government is projected to increase, boosted by higher income from increased yield of US treasury utilised for forex reserve deployments, strong commissions from forex operations and interest income on government securities
RBI is seeking the government’s approval to remove the 30% cap on foreign banks using Vostro accounts to invest in short-term sovereign debt. This initiative is aimed at encouraging greater rupee-denominated investments and facilitating trade
The India-UK FTA includes provisions for EV trade, with the UK gaining access to a quota for selling 22,000 high-value EVs at a 10% duty, while India gets a quota for low and mid-range EV exports to Britain. India will lower automotive tariffs to 10% from the current duty of more than 100%
Global Update
The Federal Reserve kept US interest rates on hold for the 3rd meeting in a row. Officials highlighted growing concerns that the President’s tariffs will trigger a fresh burst of inflation and weaken the job market
The J.P. Morgan Global Composite PMI Output Index posted 50.8 in April, down from March's 3-month high of 52. The fall was led by PMI services that dropped to 50.8 in April from 52.6 in March, while manufacturing PMI remained in contraction territory
U.S. and Britain announced a limited bilateral trade agreement. The agreement leaves in place Trump's 10% tariffs on British exports, modestly expands agricultural access for both countries and lowers prohibitive U.S. duties on British car exports
The People’s Bank of China (PBoC) cut the 7-day repurchase rate by 10bps to 1.4% and will reduce the reserve requirement ratio by 50bps in an effort to help the economy amidst the trade war with the US
Equity
The benchmark indices opened positive but remained rangebound through most of the week as ongoing India-Pakistan geopolitical tensions made investors cautious. Persistent buying activity by FIIs reflects confidence in India's economic prospects. Investors are awaiting the CPI & WPI data and the remaining corporate results for further cues.
During the week, the Sensex lost 1.30% to close at 79454.47 while the NIFTY declined 1.39% to close at 24008.00.
Debt
Indian G-Sec yield opened lower early in the week but moved upwards as the domestic geopolitical tensions escalated. RBI has shifted its 10-year benchmark to the 6.33% GS 2035 bond. Despite surplus liquidity following the RBI's intervention through OMOs, investors are cautious due to escalating India-Pakistan geopolitical tensions.
The 10Y benchmark G-Sec was trading at a yield of 6.38% on May 09, 2025 at 16:45 IST.
Oil
Oil prices opened lower reaching a 4-year low and breached the USD 60 mark as OPEC+ signalled an increase in production over the weekend. Prices picked up through the week on the back of increased demand from China and Europe as well as lower oil production from the US. The prices were further supported by hopes of a breakthrough in the ongoing US-China trade negotiation, the 2 largest oil consumers.
Brent was trading at USD 64.06 on May 09, 2025 at 16:45 IST.
Gold
Gold prices opened positive but traded mixed through the week. Fresh concerns over a potential US recession and continued economic uncertainty from the tariff war supported safe-haven demand. Developments in the US trade negotiations with partners and improving investor sentiments impacted the prices through the week.
Gold was trading at USD 3330.70 Per Ounce on May 09, 2025 at 16:45 IST.
Currency
The USD/INR pair traded upward through the week. Ongoing tensions between India-Pakistan turned investor sentiment cautious. The USD index also gained after the US-UK limited trade deal strengthening the dollar. RBI continues to intervene and stabilise the currency by limiting volatility in the Indian Rupee.
USD/INR was trading at 85.38 on May 09, 2025 at 16:45 IST.
May 09, 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.
