Published : February 20, 2021
Indian economy is considered a developing market economy. The economy of India by Purchasing Power Parity (PPP) is the third-largest in the world and fifth-largest by nominal GDP. The growth perspective of India also seems bright in the long term because of its young population. The economic data is released by central from time to time on the Indian economy.
We are going to discuss five important data and their impact on Indian markets.
The national income of the country is denoted by Gross Domestic Product (GDP). It is also known as Gross Domestic Income (GDI). It is calculated by adding the value of all the final goods and services produced in the country. It indicates the economic health of a country, and economists use it to gauge economic performance. The GDP data is updated quarterly on mospi.nic.in, and the increase in GDP numbers is considered a positive sign for the country’s economy and the stock market. The formula for calculation of GDP number is given below-
GDP = Consumption + Investment + Government Spending + Net Exports
The index of industrial production denotes a condition of industrial production during a particular period of time. This is calculated on the basis of the previous numbers, such as currently the data of the year 2011-12 has been taken as the base year for further calculations, and the index level is taken 100 presently. The sectoral composition of IIP data is taken from three different sectors mining, manufacturing, and electricity and the weight of all three is 14.37, 77.63, and 7.99, respectively. The data is published monthly by the Central Statistics Office, and the data can be found of mospi.nic.in. Indian stock markets react well with IIP data, and the higher number is taken as positive for the INR while the lower numbers are taken as negative for the INR.
Inflation is the rise in the price of goods and services of common use such as housing, clothing, food, transport, etc. It measures the average price change in goods and services over a particular period of time. There are two ways to measure inflation: the Wholesale Price Index (WPI) and the Consumer Price Index (CPI). The CPI is based on retail prices, while the WPI represents a basket of wholesale goods. It is updated monthly, and the data can be found on mospi.nic.in. The increment in the numbers is considered negative for INR, while the decrease in numbers is considered positive for INR.
When imports of a country are more than their exports in a given period of time, a trade deficit occurs. It is also called a negative balance of trade. In the short run trade deficit allows nations to avoid the shortage of goods and other economic problems. However, it put pressure on the particular country’s currency and devalues it. On the other hand, if the exports of a country are more than its imports, it is called a trade surplus. The trade balance data can be found on www.commerce.nic.in, and it’s published monthly on that. The data increase is considered a negative sign for the country’s economy, stock market, and currency.
Forex reserves are used by a country to settle trade deficits between countries. Forex reserves are kept in foreign currency assets, gold, SDRs holding, and IMF reserves. At the time of the financial crisis, foreign exchange reserves are useful in a prudent manner. An increment in the forex reserves data numbers is considered positive for that particular country’s currency. In contrast, a lower value of data is considered negative for the currency. Forex reserve data is published monthly on the RBI website.
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