● Inflation and interest rate: RBI monetary policy committee decided to hike the Policy Repo Rate by 50 bps to 4.9% in its June meeting. In upcoming policy week further we expect 35bps hike in policy rates in line with RBI’s focused on a withdrawal of accommodation to ensure that inflation remains within the target while supporting growth. In our view, the performance of the Indian market over the next few months will depend on the trajectory of domestic and global inflation.

● Quarterly earnings: The 1QFY23 corporate earnings has been a mixed bag thus far with earnings miss from heavyweight stocks, which has been compensated by strong operating performance by BFSI sector. Most manufacturing companies have reported decline in gross margins led by higher raw material cost. Management commentaries so far has been encouraging with no major sign of demand slowdown.

● Power shortage: India is facing its worst electricity shortage. Coal prices on the other hand have risen significantly leading to higher energy cost for manufacturing companies. The government asked the electricity companies to import coal.

● Monsoon update: India is likely to receive normal rainfall between 94-106% of long term average in July the state-run IMD predicted. This is likely to be 4th consecutive year of normal monsoon. However, rainfall level varries at state level with few states in north have deficient rainfall till date whereas few southern states have seen excessive rainfall.

● GST collection: GST collection rises further to Rs~1.49 lakh crore in the month of July, higher by 28% as against corresponding period in the last year. GST collection in july has been second highst ever since intoruction of GST after the highest collection of Rs1.68 lakh crore that was reported in the month of April 2022 and subsequent two strong collection month of May and June 2022. Robust collection will further boost government fiscal position and will provide cusion to the impact that can be seen from recent tax cut in order to fight inflation.

● Covid: Cases/Vaccinations: Covid cases has risen offlate on national level. However it seems to be under control so far. CoVID related restriction have been relaxed to great extent with economic activies are continues to be at normal pace. India continues to vaccinate at good pace with more than 2/3rd of Indian population is partially vaccinated and more than half of the total population is fully vaccinated.