Market Roundup. Chart M1: Sector-wise Growth Rate (%) in Production Petroleum. Fertilizers. Products

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1 Macro-Economic Overview Market Roundup Domestic Macroeconomic Development The International Monetary Fund's (IMF) bi-annual publication, World Economic Outlook (WEO), has projected India's growth to emerge out of the shadows of the recent disruptive reforms and reach 7.4% for Growth is projected to be higher at 7.8% in 2019, aided by strong private consumption and continued implementation of structural reforms that aid private investment and raise productivity. In a separate report on the South Asian economies, the World Bank also underlined the fact that the Indian economy has indeed bottomed out and is expected to revive to a growth of 7.3% in 2018 and to 7.5% in Private consumption is expected to revive demand, and growth will be led by the services as well as the manufacturing sector. However, the report also underlined downside risks in the form of sluggish private investment and exports. While private investment is bogged down by the mountain of NPA in the banking sector, export led growth is expected to rebound as global conditions improve. The fiscal situation appears sustainable but might face deterioration with further farm loan waivers, uncertainty over recapitalization of public sector banks and salary revisions in the public sector. The Monetary Policy Committee (MPC) decided to keep the key policy rate (repo rate) unchanged in its first bi-monthly monetary policy meet for the FY According to the MPC, though inflation has appeared to taper off in the final quarter of FY on account of lower vegetable prices, its future trajectory is dependent on unpredictable factors such as the course of South West Monsoon, final minimum support price (MSP) impact, international crude prices etc. The MPC lowered its projections for FY inflation range by 30 bps, while revising GDP growth upwards by 20 bps. Upward trends in fixed private investment, infrastructural development and manufacturing, with rise in private consumption prompted the Committee to revise its forecast. Chart M1: Sector-wise Growth Rate (%) in Production 30.0 (%) Coal Crude Oil Natural Gas Petroleum Products Fertilizers Steel 5.0 Feb-17 Jan-18 Feb Cement Electricity 4.0 Overall

2 Macro-Economic Overview Growth in eight core industries decelerated marginally to 5.3% in February 2018 (6.1% in Jan) as production in crude oil and natural gas continued to decline over the previous year. Production of coal also decelerated to 1.4% (3.2%). Cement production grew from strength to strength as it registered a historic annual growth of 22.9% in the reported month. This is the fourth consecutive month of double digit growth in the cement industry, indicating a revival in the construction/infrastructure sector, a major source of employment in the unorganized sector. Steel production also revived after two months of stagnancy (5.0% vs 1.7%). Table M 1: India's Industrial Production Growth Profile (at Base Year ) Growth (Y/Y) Rate (%) Growth (Y/Y) Rate on Use-Based (Goods) Classification Period Mining MFG Electricity IIP Primary Capital Intermediate Infrastructure/ Construction Durables Consumer Non- Durables May Jun Jul Aug Sep Oct Nov Dec Jan Feb Source: MOSPI & CCIL Research India's industrial output decelerated marginally in the month of February 2018, primarily reflecting the stagnancy in the mining sector. The benchmark output index or IIP grew by 7.13% in February, as against 7.4% in the previous month. The data reflected strong upward trend in private investment and infrastructural development, as growth in capital goods production registered a 28 month high of 20%. This is the third consecutive month of double digit growth in capital goods, indicating that the economy might finally be shrugging off the debilitating effects of GST implementation and currency ban. Growth in infrastructure also reached double digits (12.6%) after a two month gap. Consumer demand is also set to return to normalcy, as growth in consumer durables increased to 7.9% (7.8% in Jan). 83

3 Macro-Economic Overview Table M2: Indian Inflation (Y/Y) Rate (%) Environment Type WPI Inflation Rate (New Series) Items Mar'18: P Feb'18: R/F 3 Months Ago: R 6 Months Ago: R 1 Year Ago: R Primary Fuel & Power Manufacturing WPI FOOD CPI-Rural CPI Inflation Rate CPI-Urban CPI-Combined CFPI (C) Source: Controller General of Accounts (CGA) BE: Budget Estimate, RE: Revised Estimate, PR: Provisional Estimate Price levels continued to ebb in the economy as vegetable prices cooled in the face of supply glut, though fuel prices hardened as domestic fuel providers hiked prices. Consumer prices in India, measured by the growth in Consumer Price Index (CPI) decelerated marginally to 4.28% (4.44% in February). Rise in vegetable prices slowed to 11.7% (17.6%), while price of protein items such as eggs, poultry and fish also decelerated. Price of cereals, fruits, oils and fats rose marginally. Though fuel and light segment also decelerated (5.73% vs 6.88%), it is almost certain to face upward pressure in the coming months, as domestic petrol and diesel providers raised prices in April. The continual impact of the HRA hike through the Seventh Pay Commission (CPC) recommendations was also felt through rise in housing price levels (8.31% vs 8.28%). In the wholesale segment, represented by the WPI growth, fuel prices rose from February levels (4.70% vs 3.81%), while the headline index itself remained stagnant (2.47% vs 2.48%). Core inflation, i.e. inflation excluding food and fuel, decelerated (3.61% vs 3.92%), together with food (-0.07% vs 0.07%). Government tax revenue was lower by 9.8% on an M-o-M basis in February. However, a 63.5% increase in non-tax revenue and a large increase in non-debt capital receipts, probably through strategic sale of publicly held assets, implied that the total receipts increased by 27.8% annually. Capital expenditure too increased by 19.4% over previous month, while revenue expenditure increased marginally by 1.9%. 84

4 Macro-Economic Overview On a cumulative basis, fiscal deficit reached 131% of budgetary allocation in February 2018, while the revenue deficit was 163% of the budgeted amount. Table M 3: Central Government's Income - Expenditure Details ( ` Crore) : PR : BE Source: Controller General of Accounts (CGA) BE: Budget Estimate, RE: Revised Estimate, PR: Provisional Estimate Growth (%) Feb-18 Apr-Feb'18 Cumulative Actuals / BE (%) Total Receipts % Revenue Receipts % Non-Debt Capital Receipts % Total Expenditure % Revenue Expenditure % Capital Expenditure % Fiscal Deficit % Revenue Deficit % Primary Deficit India's exports grew 13% over the previous month to reach US$29.11 billion in March Imports also increased by the same rate on an M-o-M basis, as the trade deficit widened to US$13.7 billion, from US$12 billion in the previous month. On an annual basis however, exports declined by 0.7% over March 2017, while imports increased by 7.1%. Within export items, organic chemicals (31.8%), rice (20.9%) and cotton yarn/fabrics/made-ups, Handloom Products etc. (14.3%) registered significant positive growth. Within imports, coal, coke &briquettes, etc. (44.67%), machinery, electrical & non-electrical (33.41%), and petroleum, crude & products (13.92%)were the top segments in terms of growth. Oil imports on a cumulative basis grew by 25.5% between April 2017 and March 2018, the period during which, global crude prices have increased by 27.9%, explaining the large increase in the value of imports. Cumulative non-oil imports also grew by 17.9% by value for the aforementioned period. Table M4: India's Trade (Merchandise & Services) Profile ($ Billion) Merchandise Trade Services Trade* Period Exports Imports Oil Imports Non-Oil Imports Total Trade Balance Exports Imports Balance Growth (%) Apr-Mar' Apr-Mar' Growth (%) Source: Department of Commerce / Trade Statistics; * Services Trade Data with 1 Month Lag from Reported Month 85

5 Macro-Economic Overview Global Economic Development Global growth appeared to have strengthened in 2017, according to the IMF's World Economic Outlook for. Growth has been driven primarily by global trade and private investment, particularly in advanced economies. It is expected to grow to 3.9% in However, beyond 2019, growth is expected to slow down once fiscal stimuli in key developed economies are drawn to an end. Additionally, inward looking economic policies, bordering on trade protectionism, also pose downside risk to global growth. Fresh geopolitical tensions in the Middle East, Syria and continued crisis in Venezuela are certain to impose additional pressure on global commodity prices, which are already under the pump from production cuts imposed by the OPEC cartel. Table M5: Global Economic Growth Rate (%) Prospects Regions / Country World ADEs US Euro Area Japan UK EMDEs China India Russia Brazil S. Africa Source: IMF's WEO, As expected, the Federal Reserve raised its target range for its policy rate, by 25 basis points in its March meeting. The target range now stands at %. The Fed Committee believed that economic outlook has strengthened in recent months, and is expected to do so further, prompting the central bank to raise its median forecast for GDP growth to 2.7% (2.5% earlier) for Unemployment is expected to be lower, while inflation would remain the same for While the policy stance remained accommodative, the Committee believed that economic conditions in future will evolve in a manner that would warrant further tightening in the policy rates. 86

6 Macro-Economic Overview Table M6: Major Global Macroeconomic Indicators Economy GDP Growth Inflation IIP Growth 10-Y Sovereign Bond Yield (Q4:2017) Mar-18 Feb-18 Mar'18 (Month End) Eurozone US UK Japan* China India (Q3) Russia (Q3) Brazil South Africa* Source: Respective Country Data Source, IMF, World Bank, OECD, M-END: Month End The Bank of England (BoE) kept the policy rate unchanged in its March 2018 meeting. A tightening labour market is expected to increase income which will put an upward pressure to inflation rate, keeping it above the 2% target level in the short term. Though GDP growth slowed in the fourth quarter of 2017, latest indicators suggest that growth is expected to rebound on the back of exports and private investment. The MPC felt that the tightening phase in the monetary policy is appropriate to return inflation to its target level; however, further rates is predicted to be gradual and limited. That being said, the prospect of a May rate cut remained positive. Industrial production in the Euro Area rose by 2.9% in February 2018, following an upwardly revised 3.7% increase in the previous month. Output growth slowed for intermediate, capital and consumer goods while energy production rebounded sharply The Chinese economy expanded by 6.8% in the first quarter of 2018, aided by strong private consumption, property investment and exports. GDP growth was the same in the previous two quarters as well. Industrial production grew by 6.8%. The Bank of Russia lowered its benchmark one week repo rate by 25 bps to 7.25% in its March 2018 meeting, its fifth consecutive rate cut as inflation remained low. It said that further rate cuts will continue in order to move to a neutral monetary policy this year. Domestic output grew by 0.9% in the fourth quarter of 2017, less than 2.2% observed in the previous quarter. The South African Reserve Bank (SARB) cut its benchmark repo rate by 25 bps to 6.5% in its March 2018 meeting. The MPC in charge of the decision making stated lower inflation expectations and a subdued economic growth outlook. An increase in the VAT rate is expected to add upward pressure to the inflation trajectory, but a simultaneous strengthening in the domestic currency is forecast to neutralize the threat. 87

7 Macro-Economic Overview Chart M2: Markit's PMI (Composite): A Measure of Economic Activity Dotted Line No Change in Economic Activity Global Economy US Eurozone Japan China India Russia Brazil South Africa Feb-18 Mar-18 Neutral Line Money Market Review The Monetary Policy Committee (MPC) continued to be cautious on upside risks to inflation and maintained a neutral stance by keeping the key interest rates unchanged in its first bi-monthly monetary policy statement for the financial year The policy rate under the liquidity adjustment facility (LAF) was unchanged at 6%, the reverse repo rate under LAF was at 5.75%, the marginal standing facility (MSF) rate and bank rate at 6.25%. Liquidity in the system remained comfortable on most days, although it tightened on a few occasions due to tax outflows. The weighted average call rate inched closer to the policy repo rate by 9 bps in March 2018, although it ended up way above the repo rate at 7.57% due to the financial year end rush by banks. Baring the rate on the last working day of the financial year, the inter-bank call market rates ranged between 5.83% to 6.00%. The average daily volumes in the call market increased by 18% during the month due to demand for funds by banks to meet their financial year end requirements. The weighted average rates ranged between 4.84% to 6.24% in the CBLO market and between 5.71% to 6.49% in the repo market. Volumes in the CBLO and market repo segment fell by 9% and 18%, respectively. Table M7: Comparative Weighted Average Money Market Rates (%) Mar-18 Feb-18 3 Months ago 6 Months ago Year ago CALL REPO CBLO

8 Table M8: Comparative Money Market Volumes and Rates Gross Daily Average Std Minimum Maximum Market Share Volumes (` Cr) Volumes (` Cr) Dev Rate (%) Rate (%) (%) Mar-18 Feb-18 Mar-18 Feb-18 Mar-18 Feb-18 Mar-18 Feb-18 Mar-18 Feb-18 Mar-18 Feb-18 CALL 352, , , , REPO 917, ,057, , , CBLO 2,217, ,306, , , Liquidity Adjustment Facility Liquidity in the system moved between surplus and deficit during March 2018 with RBI absorbing `33,522 crore on a net average daily basis, while it injected `5,008 crore leaving the system with a net surplus of `28,514 crore. Liquidity conditions which remained comfortable in the first half of March 2018 tightened during March 16-17, 2018 mainly on account of quarterly advance tax Liquidity was absorbed through variable rate reverse repo auctions of 5 day, 6 day, 7 day and 14 day tenors amounting to `2,33,680 crore. Government Securities Market Primary Market The government increased its planned borrowings to `5.99 lakh crore in from `5.8 lakh crore in order to bridge the shortfalls arising from lower Table M9: Volume under LAF Reverse Repo and Repo auctions as well as the MSF Amount ` Crore LAF Reverse Repo Vol LAF Repo Vol MSF Vol Mar-18 Feb-18 Mar-18 Feb-18 Mar-18 Feb-18 Total Vol Average Vol outflows. Anticipating the seasonal tightening of liquidity at the end of March, the RBI conducted term repo and reverse repo auctions apart from normal repo operations, to provide flexibility to banks in their liquidity management and to ensure sufficient liquidity towards the end of the financial year. The net injection through term auctions stood at `44,193 crore in March The RBI injected `2,77,873 crore into the system through variable rate repo auctions of tenors ranging from 6 to 16 days, and additionally also conducted auctions of longer tenors of 24 days, 28 days and 31 days. than expected revenue collection from the GST. Borrowings for were conducted till December 26, 2017 in line with the borrowing calendar fixed for the fiscal, while the revised G-Sec borrowing was spread across five weekly auctions which began in January 2018 and was concluded on February 09, The gross amount borrowed for was `5.88 lakh crore and net borrowings was `4.09 lakh crore. The government also brought back two bonds through repurchase amounting to `13,788 crore on March 15, In March 2018, 26 state governments borrowed a total of `41,259 crore through SDL's. Out of the 55 89

9 issuances, 54 were newly issued and one security was re-issued. The government also auctioned `43,461 crore through 91-day T-bills with the cutoff yield ranging between % to %, `13675 crore through 182-day T-bills with the cutoff yield between % to %, and `12000 crore through 364-day T-bills with the cut-off yield between % to %. MSS T-bills worth `1,00,000 crore matured in March The government plans to scale down its borrowings to `2.88 lakh crore in April-September of , lower than `3.72 lakh crore borrowings in the first half of It also plans to issue more floating rate bonds (FRBs) and introduce bonds linked to consumer price inflation. Further, in order to meet the market's demand for shorter tenure borrowings there will be issuances in the 1-4 year bucket for the financial year The break-up of issuances under different maturity buckets is as follows: 8.3% in 1-4 years; 25% in 5-9 years; 29.2% in years; 14.6% in years, and 22.9% in more than 20 years. The tables below provide the details of the auctions of SDLs and treasury bills along with the average cut-off yields. Date of Issue/ Auction Table M10: Details of SDL Auctions/re-issues Security Amount (` Crore) Cut-off Price (`) Yield (%) Undersubscription 06-Mar % Andhra Pradesh SDL Mar % Arunachal Pradesh SDL Mar % Chhattisgarh SDL Mar % Gujarat SDL , Mar % Haryana SDL Mar % Himachal Pradesh SDL Mar % Maharashtra SDL Mar % Punjab SDL , Mar % Rajasthan SDL , Mar % Tamil Nadu SDL , Mar % Telangana SDL , Mar % Uttar Pradesh SDL , Mar % Uttarakhand SDL Mar % West Bengal SDL , Mar % Andhra Pradesh SDL Mar % Assam SDL Mar % Chhattisgarh SDL Mar % Goa SDL Mar % Gujarat SDL , Mar % Haryana SDL Mar % Maharashtra SDL Contd... 90

10 Date of Issue/ Auction Table M10: Details of SDL Auctions/re-issues Security Amount (` Crore) Cut-off Price (`) Yield (%) Undersubscription 13-Mar % Meghalaya SDL Mar % Odisha SDL Mar % Puducherry SDL Mar % Rajasthan SDL , Mar % Tamil Nadu SDL , Mar % Telangana SDL , Mar % Uttarakhand SDL Mar % Uttar Pradesh SDL , Mar % West Bengal SDL , Mar % Arunachal Pradesh SDL Mar % Chhattisgarh SDL Mar % Goa SDL Mar % Himachal Pradesh SDL Mar % Kerala SDL , Mar % Maharashtra SDL Mar % Meghalaya SDL Mar % Mizoram SDL Mar % Nagaland SDL Mar % Odisha SDL Mar % Punjab SDL , Mar % Uttar Pradesh SDL , Mar % West Bengal SDL Mar % Meghalaya SDL Mar % Rajasthan SDL Mar % Haryana SDL , Mar % Uttarakhand SDL Mar % Bihar SDL , Mar % Chhattisgarh SDL

11 Date Amt (` Cr) Table M11: Details of T-Bills Auctions 91 day T-Bill 182 day T-Bill 364 day T-Bill Price (`) YTM (%) Amt (` Cr) Price (`) YTM (%) Amt (` Cr) 07-Mar-18 8, , , Mar-18 11, , , Mar-18 12, , , Mar-18 10, , , Total Price (`) YTM (%) Table M12: Average T-Bills Cut-Off Yields (%) Mar-18 Feb-18 3 Months ago 6 Months ago Year ago 91-day T-Bill day T-Bill day T-Bill Secondary Market Yield Movement Trading volumes in the secondary market improved during the month of March, with daily average trades of 3420 valued at `36,053 crore against 3107 trades valued at `34,109 crore in the previous month. Of the total trades in the outright market, central government securities accounted for 84% of the trades and an average volume of `30,187 crore, while state government securities and treasury bills accounted for 8% each of the trades and average volume of `2,768 crore and `3, 099 crore, respectively. Trading was concentrated in a few securities with the top 5 traded securities accounting for 81% of the trading activity. 7.17% GS 2028 and 6.79% GS 2027 were the top traded securities for the month. The average settlement volumes for the month in the outright market stood at `35,348 crore against `34,855 crore worth of securities settled in the previous month. Bond yields have been volatile and have risen significantly over the past few months mainly because of heavy supply of securities, higher inflation and fiscal deficit overshoot, among others. Yield on the 10-year benchmark bond 7.17% GS 2028 rose by nearly 50 bps since January 2018 and traded in a band of % in March The yield on the 10-year bond closed at 7.69% in February and opened up 5 bps higher at 7.74% in March as the robust GDP growth for October- December fueled fears that the RBI might consider tightening its stand on the monetary policy. The outlook on bonds worsened further due to mounting concerns over foreign investment outflows pushing up the yield on the 10-year security to 7.77%, its highest closing yield since its auction in the first week of January. The weakness of the rupee against the dollar prompted the foreign portfolio investors to reduce their exposure in the Indian market, leading to fears of sustained overseas outflows from Indian sovereign bonds. 92

12 Bond markets cooled off a bit ahead of the consumer price inflation (CPI) data release on expectations of a sharp decline in the inflation numbers for February and the yield on the benchmark bond closed at 7.68% at the end of the week. Yield on the 10-year bond continued to be shaky and traded in the band of 7.57% to 7.67% as traders turned cautious ahead of the US Federal Open Market Committee meeting with market participants expecting the Fed to raise interest rates and fearing that the central bank could resort to a more aggressive pace of monetary tightening in the coming months. Yields softened as the week progressed and ended on a positive note at 7.57% on reports that the government was in favour of raising the limit for foreign portfolio investment in government securities, a move that could bridge the gap between demand and supply of dated securities. The lower-than-expected CPI reading for February further improved market sentiments. Markets turned jittery over concerns of diminishing appetite for government securities and poor participation by public sector banks, many of which have incurred enormous marked-tomarket losses on account of rising yields. However, sentiments in the bond market improved after reports surfaced that the government would take necessary steps to address supply concerns and also consider the suggestions of primary dealers, including the issuance of shorter-tenor dated securities and floating rate bonds. Yields slumped to 7.54% before the release of the gilt issuance calendar for April-September The 10-year bond yield dropped to its lowest level of 7.35% from 7.60% following a surprise cut in the government's borrowing programme for the coming fiscal year with the centre planning to borrow `2.88 lakh crore in the first six months of Besides lower-than-expected borrowing numbers, market participants also cheered the government's decision to issue securities uniformly spread across different maturities, in contrast to the concentration of issuances in the year tenors in previous years. Market sentiments ended on a positive note as the yields on the 10-year bond traded 2 bps lower and closed at 7.33% on the last working day of The yields of different tenors on the last working day of the month and the spread analysis of various tenors over a period of time are provided in the following tables. Table M13: Yield Movements (%)* Tenor Mar-18 Feb-18 3 Months ago 6 Months ago Year ago O/N month month year year year year * on the last working day of the month 93

13 Table M14: Spread Analysis Period G-Sec Spread (bps) Mar-18 Feb-18 3 Months 6 Months 1 Year 1-5 Years Years Years Years Foreign Exchange Market The Rupee largely appreciated against the dollar during the first half of March 2018 as investor sentiments remained positive following the report on February 28, that the Indian economy grew to a five-quarter high of 7.2% during October- December of , as against 6.5% reported in the previous quarter and 6.8% recorded in the same period of the previous fiscal. The strong growth in GDP was supported by a pickup in the services, manufacturing and agriculture. The rupee also strengthened against a weakening dollar after market participants turned jittery on concerns of a 6.5% expected this fiscal. The rupee accordingly gained by 0.46% to on March 08, from recorded in the beginning of the month. On March 08, the dollar recovered some lost ground after the release of the US jobs reports which highlighted that the US economy added 313,000 jobs in February, the most since July The US White House press release, stating that it planned to offer Canada and Mexico a 30-day exemption from planned tariffs on steel and aluminum imports, which could be extended based on progress in NAFTA talk, also helped in strengthening the dollar. Accordingly the Table M15: Exchange Rate Movement ` / Euro ` / Pound ` / 100 yen ` / Dollar Movement (%) Average Rate Stdev Max Min global trade war, after the US President Donald Trump's remark that trade wars were good and easy USD/INR temporarily. rate moderated to albeit to win. The US President's announcement, of The release of February retail inflation on March imposing a 25% tariff on steel and a 10% tariff on 12, which slowed for the second consecutive month aluminum imports, led to a decline in the to 4.4% from 5.1% in January, along with factory greenback against its major counterparts. The output, which grew at a robust pace for the third rupee also extended its gains after rating agency straight month at 7.5% in January, aided in the CRISIL in a report on March 05, projected India's appreciation of the rupee. The sudden dismissal of GDP growth to be 7.5% in the next fiscal year from US Secretary of State Rex Tillers on and news that 94

14 Washington may impose tariffs of upto $60 billion of Chinese imports further dampened investor sentiments in the dollar. This led to an additional strengthening in the rupee to The second half of March 2018 witnessed a sharp reversal in the rupee gains after market participants negatively reacted to data on the country's overall trade deficit. India's trade deficit widened to million during the month of February 2018 as against $ million in February Indian rupee further weakened against US dollar after India's current account deficit widened sharply, mainly driven by higher imports. The current account deficit in the October-December period widened to 2.0% of GDP, up from 1.4% in the same period of the previous fiscal. The rupee continued its downward spiral until March 21 to The rupee gained an upward momentum after the finance ministry noted on March 26, that India is on track to doubling the size of its economy to $5 trillion by 2025 and asserted that the inflation target set by the Reserve Bank would not be breached. Indian rupee further strengthened to 64.80, after the government announced that it would borrow a smaller portion of its annual target in the first half The government decided to borrow around `50,000 crore less than its `6.05 trillion market borrowing plan announced in the budget by reducing bond buybacks and increasing its borrowing from the National Small Savings Fund (NSSF). The rupee however moderated by 0.38% to close at on March 28. Table M16: Exchange Rate Movement Exchange Rate Mar-18 Feb-18 3 Months ago 6 Months ago Year ago ` / Euro ` / Pound ` / 100 yen ` / Dollar The rupee depreciated by 1.30%, 2.03% and 1.22% against major currencies such as the Euro, Pound and Yen during the month of March. The average forward premia curve inverted for the month of March as the 1 month rates soared to an average rate of 4.90% against 3.88% reported at the long end of the curve. While 1 month forward premia rate increased by 43 bps, the 12 month rates fell by around 39 bps. Table M17: Movement of Forward Premia over a Period of Time (Monthly Average) (Percent) Mar-18 Feb-18 3 Months ago 6 Months ago Year ago 1-month month month month month

15 During the entire month, the FPIs made a net investment of USD million in the equity segment as against a net outflow of USD 1708 recorded in the previous month. Foreign investors turned net sellers to their debt positions of around USD million, vis-à-vis USD million recorded in February Accordingly net inflows stood at a billion during the month. On a cumulative basis, FPIs invested million during Jan-Mar quarter. Table M18: Movement of FII Flows (USD Million) Quarter Net Investment in Equity Net Investment in Debt Total Q Q Q Q India's foreign exchange reserves increased marginally to USD billion during the month of March 2018, recording an increase of 0.86%, against USD billion in the previous month. The increase in the foreign exchange reserves was mainly attributed to the increase in the country's foreign currency assets which stood at USD billion against USD billion reported in the beginning of March The foreign currency assets currently account for 94% of the total reserves. The value of gold and SDRs in the foreign exchange reserves inched upwards by 0.43% and 0.97% respectively. 96

16 Chart M3: Foreign Exchange Reserves 435,000 15, , , ,000 10,000 USD Million 375, , , , ,000 5,000 0 USD Million 300, ,000-5, , ,000-10, , ,000-15,000 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Change in Reserves Foreign Exchange Reserves India's foreign exchange reserves declined marginally to USD billion during the month of February 2018, recording a dip of 0.27%, against USD billion in the previous month. The decline in the foreign exchange reserves was mainly attributed to the drop in the country's foreign currency assets which stood at USD billion against USD billion reported in January The foreign currency assets currently account for 94% of the total reserves. The value of SDRs in the foreign exchange reserves also dropped by 1.16% to 1.5 billion. Banking Sector Table M19: Trends in Scheduled Commercial Banks' Business ( ` Cr.) Mar-18 Feb-18 3 Months ago 6 Months ago Year ago Money Stock Aggregate Deposits Non-food Credit Investment in G-Secs Bank credit deposits by 2.57%, causing the credit-deposit ratio month to `29.05 lakh crore from around `31 lakh to move upwards to 75.39%. The investment crore in the last month. deposit ratio dipped marginally from the previous 97

17 Table M20: Key Banking Rates and Ratios (%) Mar-18 Feb-18 Credit-Deposit Ratio Investment-Deposit Ratio Base Rate MCLR (Overnight) Term Deposit Rate >1 Year Savings Deposit Rate