Key Economic Forecast
Performance in industrial activity will remain a concern during the next few months due to lack of consumption demand,high interest rates,pessimistic investment scenario and increase in overall prices. IIP is expected to remain subdued barring the festive months where demand usually uplifts industrial production. Going ahead,IIP is expected to remain in the range of 1.0%-2.0% during August.
Strong depreciation of rupee along with elevated global crude oil prices is likely to provide upward pressure to overall inflation in the near term. WPI inflation expected to remain in the range of 6.1%-6.3% during September.
Money & Finance
Foreign fund outflows in the debt market and liquidity constraints due to liquidity tightening measures taken by the RBI are likely to keep the yields elevated in the gilts market. Credit growth is also likely to remain moderated as overall demand conditions remain subdued. 15-91 day T-Bill yield is likely to average at around 10.7%-10.9% and 10-year G-sec yield at around 8.9%-9.1% during September.
While,measures taken by the RBI and the government in the recent past is likely to support rupee,the movement of rupee in the near term will depend on the policy direction from the US Federal Reserve and development in the Indian economic scenario. The rupee is expected to average at around 65.10-65.20 per US$ during September.