The Reserve Bank of India is expected to pause for a second straight month as inflation eases and market watchers are looking for cues of a shift in policy stance to support growth in the economy.

Growth in payments remains strong. This is led by (1) expected total CC spends of Rs1.4trn in May’23 (up 4% MoM), (2) increase in receivable per credit card, (3) increase in cards in force (CIF) to 86.5mn, up 1.42% MoM in Apr’23, (4) MoM increase in Paytm GMV of 9% in May’23 and (5) increase in UPI transactions in terms of value/volume by 43/58% YoY to 9.5bn/Rs14.9trn in May’23, respectively.

From a peak of ~7.6% in Jun’22, the 10-year bond yield (RF - risk free rate) has dipped to sub 7% currently as the aggressive interest rate tightening cycle peaked. ERP (equity risk premium) indicators for India have also dipped significantly over the past one year in the form of: (a) Sharp decline in CDS of India 10-year bond from 230bps to ~150bps currently.

The monthly data on lending and deposit rates of scheduled commercial banks (SCBs) (excl. regional rural banks and small finance banks) for Apr’23 suggests: 1) SCBs’ outstanding weighted average lending rate (WALR) continues to rise (up 4bps MoM). 2) However, WALR on fresh loans has seen MoM decline (down 23bps) in Apr’23, after 11 months of consecutive rise.

Q4FY23 saw profitability improving across companies mainly led by higher realisation and lower cost. Key highlights: 1) Realisation for ferrous companies rose by Rs1,500- 2,000/te on average; 2) coking coal cost was down by US$8-10/te for all ferrous companies except SAIL.

The Asian Markets are trading in the green while investors await Australia's central bank decision during the day ahead. Nikkei was trading higher by 0.41%, Hang Seng was trading higher by 1.16%, and Shanghai was trading higher by 0.14%.

The total value of credit card transactions rose 25.9% YoY but declined 3.3% MoM to Rs 1,33,125 crore. The number of cards outstanding increased by 15.1% YoY. Private sector banks grew by 32.9% YoY in terms of value of transactions.

The Insurance Regulatory and Development Authority of India (Irdai) has directed all life and non-life insurance companies to initiate steps for quick registration and disposal of claims of victims of the triple train accident in Odisha’s Balasore district.

Our analysis of defence sector for May’23 indicates: 1) RFI has been issued for procurement of 5,000 ATGMs and 8x8 HMVs; ii) second export order of Pinaka rocket launcher is likely to be finalised soon; 3) efforts afoot to export LCH- Prachand to Nigeria; 5) development trails of Pralay SRBM are complete while QRSAM is set to undergo its final trails next month.

Post outperforming benchmark Nifty 50 by ~10% in the past six months, India auto index (Nifty Auto), we believe, has limited upside triggers left from a 6 month perspective. We expect volume growth moderation across PVs, CVs, 2Ws and tractors in FY24 along with benefits of reduction in raw material basket cost (RMB) being fully priced in.

AXSB continues to focus on granularity & retailisation as its central themes for deposit growth. The deposit growth as of March 31, 2023, stood at 15.2% YoY/ 11.6% QoQ, with CASA at 47.2%, an improvement of 213 bps YoY/ 262 bps QoQ. Deposit growth was owing to a) strong customer acquisition; b) initiatives to strengthen the corporate salary segment; and c) premiumization strategy and the recent acquisition of CITI, which led to an 870 bps YoY increase in the premium segment.

From a peak of ~7.6% in Jun’22, the 10-year bond yield (RF - risk free rate) has dipped to sub 7% currently as the aggressive interest rate tightening cycle peaked. ERP (equity risk premium) indicators for India have also dipped significantly over the past one year in the form of: (a) Sharp decline in CDS of India 10-year bond from 230bps to ~150bps currently.

In the upcoming monetary policy on 8th June'23, the RBI is expected to maintain a pause on interest rates in and keep repo rate unchanged at 6.5%

Automobile wholesales of listed companies rose 22.1% YoY to 14.1 lakh units in May, while exports fell 26.9% YoY to 2,15,190 units.

Domestic two-wheeler wholesales of listed companies were up 27.1% YoY to 10.3 lakh units, and passenger vehicles rose 14.3% YoY to 2.2 lakh units.

Wood panel companies under our coverage reported a mixed bag of operating performance in Q4FY23 with Century Plyboards (CPBI) surprising positively. Plywood and allied segment revenue for CPBI and Greenply Industries (MTLM) grew 18.4% and 3.1% YoY, respectively (4-year CAGR of 14.5%/5.6%).

Domestic 2W retails in May’23 (1.5mn units) were up ~9% YoY and up 21% MoM, post a dull April’23, with continuation of marriage season and improving rural sentiment. e-2W retails crossed 100k mark in May post a weak April at 66k units, we believe, driven by pre buying on account of pre-empted price hikes on partial subsidy removal.