The economic calendar and its implications for investors

Economic announcements are broadly of two categories: data announcements and policy announcements. While data announcements are more about trends and finer nuances, policy announcements are more about the policy implications of statutory announcements.

Oct 28, 2018 09:10 IST India Infoline News Service

Economic Growth
For any stock market trader or investor, announcements form an important part of the analytical matrix. Economic announcements are broadly of two categories: data announcements and policy announcements. While data announcements are more about trends and finer nuances, policy announcements are more about the policy implications of statutory announcements. The calendar is broadly divided into a fortnightly calendar, monthly calendar, and a periodic calendar.
 
The table below captures the gist of the economic calendar and implications for investors.
 
Calendar Event Periodicity of coverage Major implication
Domestic - Fortnightly Data
RBI Forex reserves Announced every 14 days by the Reserve Bank of India Analyzes reasons for reserve changes like FII flows, FDI flows, RBI intervention, etc.
Bank Deposit growth Announced every fortnight by the Reserve Bank of India Depicts the quality of growth in deposit flows including CASA and other classes of deposits
Bank Credit growth Announced every 14 days by the Reserve Bank of India Depicts the YOY growth in overall credit with breakup of industrial, agriculture, consumer loans, etc.
Domestic - Monthly Data
CPI Inflation Announced by the Ministry of Statistics and Programme Implementation (MOSPI) in second week of each month depicting previous month data Shows retail inflation on a YOY basis with the breakup of food and non-food inflation. Useful for gauging interest rate trajectory
IIP Growth Announced by MOSPI in second week of each month showing data of month before last Shows growth in manufacturing, mining, and electricity with productwise breakup of leaders and laggards in industrial growth
WPI Inflation Announced by the MOSPI in the second week of each month depicting previous month data Represents inflation at the producer level and varies from CPI. Often acts as a lead indicator for direction of CPI inflation
Trade Data (Goods) Announced by Commerce Ministry in the second week of each month for goods trade of last month Depicts growth in exports, imports, and monthly trade deficit in merchandise trade. A key data point for rupee value
Trade Data (Services) Announced by RBI in second week of each month depicting data of month before last Depicts growth in exports, imports and deficit/surplus in services. Reported by RBI with a lag of one month and key to rupee value
Core Sector/Infra Output Announced by MOSPI on last day of the month showing growth in infrastructure sectors Core sector sets the tone for IIP as it constitutes nearly 41% of the IIP. Gives a picture of how the core infra sectors are performing
PMI Manufacturing Monthly trends in factory output to judge the pace of expansion. PMI above 50 is growth accretive This is put out by Markit on the 1st of each month to show how manufacturing performed. It is to be seen as absolute and relative
PMI Services Monthly trends in services to judge the pace of expansion. PMI above 50 is growth accretive, else weak. This is also put out by Markit on the 5th of each month to show how the service sector performed. It is also to be seen as absolute and relative
Domestic – Periodic Data
GDP Preliminary Data Annualized GDP estimates are put out 2 months after the end of each quarter (May/Aug/Nov/Feb) This is preliminary data for the full year and can be correlated to the full-year growth in GDP and has an impact on stock markets
Current Account Deficit The CAD is announced as a percentage of GDP every quarter and primarily includes trade data CAD is very sensitive and the rupee is immediately impacted by a rise in CAD. It is important for companies with dollar exposure
Policy Announcements
Monetary Policy Every 2nd month (6 times in a fiscal year starting April). Presented by the Monetary Policy Committee (MPC) Monetary policy is announced by the MPC and lays out the direction for inflation, interest rates, and is critical for rate-sensitive stocks
Union Budget Announced by the Finance Minister on 1st February each year. The rail budget is merged in. The most important policy document covering macro economy, direct taxes, indirect taxes, and capital market reforms
EXIM Policy Currently, we are in the midst of the 5-year EXIM policy 2015-2020 It broadly lays out the measures of the government to simplify foreign trade and give a boost to exports via incentives and tariffs
Global – Data Announcements
Central Bank Policy Bimonthly review by Fed, ECB, and Bank of Japan Gives global interest rate direction to which emerging or risky markets are mainly sensitive; gold prices are also affected
US GDP data Announced monthly Indicative of growth in the US economy, which further affects other markets and gold prices
US Jobs data Announced monthly Indicative of the level of employment in the US
 
Each of these data points in the calendar has the potential to make markets volatile and add to the risk. Understanding the implications of these policy announcements is, therefore, the key to trading and investing knowledgably. Smart investors can play ahead of these events to maximize profits ahead of these events.

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