India: Trade data broadly on track in October

[Rajesh Desai]

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Date: Monday, November 11, 2013
Subject: India: Trade data broadly on track in October
To: stock...@gmail.com

Exports growth robust, posts double digit growth for four consecutive months Imports remain muted on weak domestic demand and government intervention in gold Trade deficit widens in October but broadly in line with our CAD forecast Outlook for Rupee: Dollar strength to weigh in the near term Exports sector grew by 13.5% YoY in October as against 12.1% growth in September. This is the fourth consecutive month of double digit exports growth. The sharp improvement in exports sector performance partly reflects recovery in developed markets and partly the fact that a weaker rupee has increased competitiveness of Indian exports. Imports contracted by 14.5% YoY in October compared to a decline of 18.1% in September. Within imports, gold and silver imports remain muted at USD1.4bn in October as against import of USD 0.8 bn in September. The lower gold imports during the festive season is encouraging and reflects the fact that government intervention to curb gold imports are bearing results Though the trade deficit widened in October, this is broadly in line with our CAD expectation of USD 52 bn (~2.9% of the GDP) for FY2014. We believe that gradual improvement in exports along with weakness in imports would continue to support the outlook for India's current account deficit this year. The fundamental outlook for INR is improving on narrowing CAD. However, in the immediate near term, we see some pressure on account of a)The recent Dollar strength and b) oil marketing companies coming back to the market. Please refer to the attached document for the detailed report Regards, ICICI Bank : Treasury Research Contact: Samir Tripathi 022-2653-7233

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CA. Rajesh Desai