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According to a CNBC-TV18 poll, the October consumer price index (CPI) is expected to be in double-digits at around 10 percent. However, if it were to come at that, then one would see bond yields spike further on Wednesday because this data would be announced after market hours today, reports CNBC-TV18's Latha Venkatesh.

 

 

 

Expectation of this double-digit number is largely because of food prices. For a better part of October, onion prices in particular and vegetable prices in general did not fall much. Therefore, one is likely to get this ugly CPI number.

 

Some analysts believe it could be closer to 9.8-9.85 percent, but even that is not a far cry from the double-digit number of 10 percent. Manufacturing inflation is also creeping up and that can be seen anecdotally as well, because of rupee depreciation some prices going up -particularly fuel prices. So, all that is going to add up to a near double-digit CPI number for October. 

 

 

 

If that indeed comes through then bond yields are likely to spike on Wednesday and bank shares are likely to take a hit in anticipation that the Reserve Bank of India (RBI) will have no choice but to go ahead with another rate hike on December 18 at the next policy meet.

 

 

 

Meanwhile, September IIP data is expected to be the positive at 3.5 percent according to the poll, but quite a few analysts are expecting 4 percent. 

 

 

 

The reason for the optimism is the core sector numbers which represents eight infrastructure industries like cement, steel, electricity, mining, refinery -those came in at 8 percent growth in September and it was over an 8 percent growth in previous September as well. So, people are optimistic that IIP would have finally turned the corner. 

 

 

 

September is also a time when a lot of stocking gets done for the festive months - so consumer durables, even cars did not do too badly in September. Therefore chances are that all of this will add up to a good IIP number. 

 

 

 

One must remember that we had a decent core sector number in August as well, it came in at 3.7 percent but the IIP was only 0.6 percent. However, in September chances are that you are going to get a better connect between the core sector and the IIP number because it would be three months in running that core sector has performed very well. According to anecdotal data from companies, the Q2 numbers showed that performance was better than anticipated. 

 

 

 

The only negative is the Purchasing Managers' Index (PMI) numbers - it has not been very good for the month of September. 

 

 

Source: www.moneycontrol.com