ICICI Securities: India’s Financial Conditions Worsen To Five-Month Low In August 2020
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ICICI Securities Report
Our proprietary Financial Conditions Index (FCI) shows that financial conditions deteriorated to five-month low in August 2020.
While conditions in equity and money market improved moderately during the month, sharp deterioration of conditions in aggregate demand and debt market pulled FCI down.
FCI jumped to 9.6 in March 2020 (from 4.3 in February 2020) and averaged 11.1 during Q1 FY21 following aggressive monetary and fiscal easing to combat Covid-19.
However, it fell in August 2020 as concerns about high inflation and sharp contraction in growth pushed up bond yields. Also, non-food bank credit is estimated to have fallen to 40-month low.
Our calculation shows that Financial Conditions Index fell to 9.7 in August 2020 down from 10 in July 2020.
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