India Week Ahead 08 - 12 Jan 2024

Last week, India PMI release showed robust economic activity with input cost receding to 40 month lows. Markets also received the advance estimates of National Income for FY 2023 - 24. 

The first advance estimates of Nominal GDP peg GDP at 296.58 Lac crores, lower than budgeted estimates of 302.85 Lac Crores. The Nominal GDP is estimated to grow at 8.90% as against budgeted estimates of 10.2%. The revision lower in Nominal GDP could entail either a 12 bps increase in Fiscal Deficit or a 37K cr reduction in fiscal deficit to retain a 5.90% Fiscal Deficit target. 

		Budget Estimates	2023 - 24
		Fiscal Deficit in INR crs	17,86,816
		Fiscal Deficit as % of GDP	5.90%
		GDP (in INR crs)	3,02,85,017
		First Advance Estimates
		Nominal GDP FAE*	2,96,58,000
Scenario 1		BE Fiscal Deficit	17,86,816
		BE Fiscal Deficit as % of FAE GDP	6.02%
Scenario 2		BE Fiscal Deficit	5.90%
		Required Reduction in Deficit (in Crs)	-36,994

The Second Advance Estimates of National Income for the year 2023-24 and quarterly GDP estimates for the quarter October-December, 2023 (Q3 2023-24), along with First, Second and Third Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation for the years 2022-23, 2021-22 and 2020-21 respectively will be released on 29.02.2024.

This week, the data calendar comprises of:

Trade Numbers in Nov 23 recorded a deficit of $20.58 bn from prior month level of $ 31.46 bn. The estimates for Dec reading are not available. My own calculations suggest a reading of $ 20 bn.

CPI Inflation in Nov 23 came in at 5.55% from prior month reading of 4.87%. For the month of December, my own calculation suggest a reading of 5.60%. With an Inflation print of 5.60% for Dec 2023, the Q3 FY 24 average will be 5.34%, 26 bps below the RBIs estimate of 5.60%. 

Industrial Output grew 11.70% in October and the numbers will be released for November 2023. The data is a lagging indicator.

Keep an eye on market expectations from the Interim Budget.

For the previous week, INR Rates closed towards the higher end of the range as markets continued to reprice rate cuts from US Federal Reserve. IN10s closed the week higher at 7.235% and printed a low of 7.192%. INR 1Y Forwards closed the week higher at 1.77% from prior week low of 1.75%.

	OIS (in %)			MIFOR
Tenor	W. High	W. Low	W. Close	W. High	W. Low	W. Close
1M	6.79	6.79	6.79
2M	6.79	6.79	6.79
3M	6.84	6.80	6.82
6M	6.75	6.70	6.75
9M	6.71	6.65	6.70
12M	6.69	6.62	6.68
2Y	6.39	6.29	6.37	6.73	6.57	6.73
3Y	6.34	6.23	6.33	6.83	6.65	6.83
4Y	6.32	6.19	6.30	6.81	6.76	6.81
5Y	6.32	6.19	6.30	6.89	6.72	6.89
7Y	6.39	6.24	6.37	6.86	6.78	6.85
10Y	6.38	6.26	6.38	-	-	#N/A

Have a good week!!