The Street will be eagerly watching for two important data expected to come out later in the day today - industrial production for November and trade deficit for December. Index of Industrial Production (IIP) data will come out post market hours.
Also Read: Nov IIP may grow slightly as global demand picks up
The IIP is expected to come in at a growth of around 0.6 percent versus a decline of 1.8 percent on a month to month basis. The core sector for November which is 38 percent weightage of the IIP came in at 1.7 percent in November versus 0.6 percent on a month to month basis. The correlation with core sector and IIP hasn’t been that great.
The IIP figure is expected to be driven by the likes of electricity. The core sector itself in November - electricity data jumped 5.8 percent on a year on year basis. Manufacturing will be a key factor to watch out for. There was a decline in the previous month versus expectations of a growth. That will be a key factor to watch out for and weakness in consumer goods as well because both durables as well as non-durables contracted in the previous month. So that was a little bit of a dampener.
Mining will continue to be weak but may be the contraction or the scale of contraction of mining will possibly come down in terms of the IIP figure this time around. The range for IIP is all the way to minus 0.8 percent to a growth of 1 percent so it will be interesting to watch for in terms of what it comes out with.
In terms of trade deficit data that comes out at 11 AM, it will be more of a market cue to watch out for. This is for the month of December. The range which a couple of economists are working with is a deficit of USD 9 billion to around USD 10.5 billion. This compares to around USD 9.22 billion in November. Exports actually grew around 5.5 percent in the previous month, so any slowdown in export growth will be negative. Imports are supposed to sustain. There has been a decline in imports all the way since June but that import decline is expected to sustain. For example it will be led by gold imports. In December gold imports were restricted to around 20 tonnes and this compares to a peak of around 160 tonnes in May.
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