Earnings, inflation, trade: 5 numbers to watch this week

Photo: HT
Photo: HT


The government is set to release inflation data for March this week. Among other key numbers to track are trade data and March quarter results of three major IT firms

At the start of every week, Mint’s Plain Facts section features five key data releases to watch out for. The monthly inflation figures for March are due to be released this week, and will provide an idea of price pressures in the economy. Quarterly financial results for top companies will also start trickling in fast, and are expected to give us a glimpse of how fast different firms and sectors are recovering. Here are the five big numbers to track.

1. Inflation rate: India measures inflation in two ways. The one based on the Consumer Price Index (CPI), or retail inflation, measures how current prices of goods and services impact households directly. The Wholesale Price Index (WPI)-based inflation looks at pre-retail prices. Both data points for March will be released this week—CPI on Monday, and WPI on Wednesday.

After a year of staying high, CPI inflation has moderated in the past couple of months even as WPI inflation has moved up. Price pressures could escalate again, given supply disruptions caused by new lockdown rules.

Beyond the fluctuations in headline inflation numbers, what’s worth watching carefully are the trends in core inflation: the inflation rate excluding the more volatile components of food and fuel. Both CPI and WPI core inflation have shown a sharp uptick in the first two months of 2021, signaling rising inflationary pressures even as food prices subside.

2. Trade balance: Trade balance refers to the difference between a country’s exports and imports. The ministry of commerce and industry will release this data for India for March on Thursday. External trade had crashed in April 2020 as the pandemic forced countries to close their borders. But as global economic activity has picked pace, India’s trade numbers, both exports and imports, returned close to pre-pandemic levels by December 2020.

However, the recovery has been erratic. The first post-lockdown year-on-year growth in exports was in September 2020, but was followed by two months of decline. In February, exports were the highest in nearly two years, but the year-on-year growth was just 0.7%. Imports, meanwhile, rose 7%. The worsening pandemic could dampen exporters’ hopes if rising cases begin to hit outbound shipments.

Caution is in order while reading the data: the year-on-year comparison in March 2021 will have to contend with the base effect, given last year’s nationwide lockdown.

3. IT earnings: Three top information technology (IT) companies are set to release their quarterly earning reports for the March quarter this week: Tata Consultancy Services, Infosys and Wipro. These results will be out between Monday and Thursday.

IT stocks suffered initially when the pandemic struck but have been among the most resilient since then. The growing move towards cloud-based computing and digitization has benefited the sector. Faster-than-anticipated recovery in key markets such as the US have also enthused investors.

The guidance on how future earnings will shape up will be keenly watched by investors and analysts. The BSE IT index has climbed up significantly over the past few weeks in anticipation of healthy earnings projections for the coming fiscal. Will IT companies deliver on those expectations?

4. HDFC Bank: India’s most valuable lender, HDFC Bank, will announce its financial results for the March quarter on Saturday. The bank has had healthier credit growth compared to other banks largely because of its corporate loan book. But its retail loan book has seen anaemic growth

https://www.livemint.com/market/mark-to-market/bajaj-finance-and-hdfc-bank-show-how-the-pandemic-hit-consumption-11617729006648.html, and the bank’s retail segment revenues have slowed down.

The bank’s retail business suffered another big blow when the Reserve Bank of India imposed sanctions against its credit card business in December in response to a technical outage for customers. The stock has largely underperformed the broader indices since then. The brunt of these sanctions were felt in the March quarter, and the latest numbers will show how severe the impact has been. The bank’s retail revenue projections for the coming quarters will be keenly tracked by markets.

5. OPEC monthly report: The Organization of the Petroleum Exporting Countries (OPEC) is set to release its monthly report on the global crude oil market on Tuesday. Among other things, the report will make projections of crude oil demand of major countries, including India. The March report had projected that India’s demand would recover significantly this year after the adverse pandemic impact in 2020.

The cartel will also release estimates for India’s oil demand in February, a month that saw petrol prices rise to over Rs. 100 a litre in some cities. High taxes and rising crude prices globally are likely to have kept oil demand in check.

India’s crude oil needs are under the spotlight after an intensifying feud with Saudi Arabia, its key oil supplier and the de facto leader of OPEC. India is eager to diversify its sources beyond Saudi Arabia, the third biggest exporter of crude to India.

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