Key Economic Data You Shouldn’t Miss Every Month
As an active participant in the stock market, it is essential to stay vigilant and closely monitor key economic data that are released on a monthly basis. These data metrics hold significant influence over the Indian stock market, impacting it in various ways. In this article, we will explore and discuss several crucial indicators that warrant your attention as a stock market participant. By tracking these indicators, you can gain valuable insights into the overall economic health, trends, and potential market movements. Understanding the implications of these data metrics can help you make informed investment decisions, seize opportunities, and navigate the dynamic landscape of the stock market. Whether it is GDP growth, inflation rates, industrial production, or trade data, each indicator provides a unique perspective and contributes to shaping the market sentiment. By keeping a watchful eye on these key economic data, you can enhance your ability to analyze and respond effectively to the ever-evolving market conditions.
PMI (PURCHASING MANAGERS INDEX) DATA
The PMI, also known as the Purchasing Managers' Index, serves as a vital metric for assessing and monitoring the level of business activity within both the manufacturing and services sectors. It is released the first week of every month and is derived from a survey-based approach, where executives from a sample of companies report changes in key business variables compared to the previous month. These variables include output, new orders, business expectations, and employment. The PMI is calculated separately for manufacturing and services, then combined into a composite index. An index value above 50 indicates expansion, below 50 indicates contraction. A larger difference from 50 signifies a greater degree of expansion or contraction. Comparing the PMI with the previous month's data helps assess the rate of expansion. As it is released before official data, the PMI is considered a leading indicator of economic activity. Central banks and policymakers closely monitor it to gain insights into economic trends and make informed policy decisions.
WPI (WHOLESALE PRICE INDEX) DATA
The Wholesale Price Index (WPI) serves as a key indicator for measuring inflation representing the prices of goods at the wholesale level, where bulk quantities are traded between organizations rather than consumers. The data is released on the 2nd week of every month. WPI holds significant importance as it influences fiscal and monetary policy decisions. It provides a convenient and straightforward method for calculating inflation, with the inflation rate derived from the difference between the WPI at the beginning and end of a year. By examining the percentage increase in WPI over a year, the corresponding rate of inflation for that period can be determined. If the index consistently shows an upward trend each month, it indicates that wholesale prices of goods are experiencing inflation. Consequently, this can result in manufacturing companies facing higher input costs, which in turn may reduce their profit margins.
CPI (CONSUMER PRICE INDEX) DATA
The Consumer Price Index (CPI) is a comprehensive measure used to estimate price fluctuations in a basket of goods and services that represents typical consumption patterns in an economy.The data is released towards the middle of every month. The calculation process for CPI is rigorous, involving the classification of consumption items into various categories and subcategories based on consumer characteristics such as urban or rural. National statistical agencies typically calculate the overall price index by utilizing these indices and sub-indices. CPI is considered one of the most vital economic statistics as it provides insight into the cost of living. Inflation is measured using the CPI, where the percentage change in the index over a specific period reflects the amount of inflation experienced, representing the increase in prices for a representative basket of consumed goods.A rise in the Consumer Price Index (CPI) signifies an upward surge in prices for essential retail goods. The Reserve Bank of India (RBI) presently relies on the CPI as the primary gauge of inflation for formulating monetary and credit policies.
AUTO SALES DATA
Auto sales data refers to the number of vehicles sold over the specified period of time.The data is released on 1st of every month.In India, all auto manufacturers are required to disclose their monthly sales figures, allowing for comparisons with both the previous month and the same period of the previous year. By analyzing these sales figures, we can gain insights into the demand for vehicles. A significant decline in overall sales can be seen as a bearish phase for auto manufacturers and their associated companies, as it indicates a decline in their business activities.
TELECOM SUBSCRIPTION DATA
The Telecom Regulatory Authority of India (TRAI) releases monthly subscription reports for the leading telecom companies in India, providing insights into the characteristics of telecom users. However, there is a two-month delay in the data provided by TRAI. As participants in the stock market, it is important to analyze the subscriber additions of major telecom players such as Reliance Jio, Airtel, and Vodafone Idea. Continuous loss of subscribers can be a critical indicator for a telecom company. Additionally, evaluating the average revenue per user (ARPU) of these telecom companies is crucial, as an increase in ARPU is generally seen as desirable.
INSURANCE PREMIUM COLLECTION DATA
Life insurance and general insurance companies require policyholders to pay a premium in exchange for coverage in their respective segments. The Insurance Regulatory and Development Authority of India (IRDAI) publishes monthly data on the gross premium collected by insurance companies, typically during the second week of the month. This data allows for the analysis of the performance of listed insurance players. Comparisons can be made between the current month's data, the previous month's data, and the data from the same period in the previous year. An overall increase in premium collection has the potential to trigger a rally in insurance stocks, making it a significant factor for investors to consider.
GST (GOODS & SERVICES TAX) COLLECTION DATA
The data on GST collections serves as a significant measure of a country's financial strength and plays a crucial role in assessing its overall fiscal health. It provides valuable insights into the trend of GST collections, enabling an evaluation of whether they are witnessing an upward or downward trajectory on a monthly basis. Every month, the Ministry of Finance releases a report on aggregate and state-wise GST collections, providing valuable insights into the overall performance of the economy. An upswing in GST collection serves as an indication that consumers are increasing their spending, which in turn contributes to the growth of the economy and related industries.
ENERGY CONSUMPTION DATA
The Power System Operation Corporation (PSOC) releases reports on energy consumption, installed capacity of electricity generation, and distribution at the end of each month. These reports provide valuable insights into the overall dynamics of the power sector. A surge in power demand and consumption can potentially spark a rally in stocks related to the power industry, making it an important factor for investors to consider.
FOREIGN EXCHANGE RATE
The Reserve Bank of India provides daily quotes for the exchange rate between the Indian rupee (INR) and foreign currencies, with particular attention to the rate against the US dollar (USD). Monitoring the exchange rate data is crucial, especially in relation to the INR-USD rate. A depreciation of the Indian rupee signifies potential benefits for exporting companies, as it allows them to generate higher revenue by earning in dollars. Conversely, if the rupee strengthens, importing companies may find it advantageous.
COMMODITY PRICES
Similar to all other data ,it is very important to check various commodity prices like Gold,Silver,Copper, Crude Oil,Natural gas etc on a regular basis.Given that major commodities serve as crucial inputs for various manufacturers, fluctuations in commodity prices can have a significant impact on their expenses. For instance, paint manufacturers rely on crude oil as a key input, making them vulnerable to price increases, which can directly impact their profit margins. Therefore, the rise or fall of commodity prices holds substantial implications for these firms and their operational costs.
