Reuters Market Eye - India will release November factory output on January 10, the first important data ahead of the Reserve Bank of India’s monetary policy review on January 28.
Industrial output data will be followed by the more important December consumer and wholesale inflation data in the week starting Monday, January 13, amid widespread expectations food prices have substantially eased last month.
Although the RBI surprised investors by keeping interest rates on hold last month, after 25 bps hikes each in September and October, inflation is expected to hold the key to its future action.
The rupee has started the year on a weak note, being hostage to global dollar strength and will look at global cues, including China GDP and Fed minutes for additional cues.
For debt markets, cash is expected to remain comfortable with the overnight rate near the central bank’s repo rate.
A key report on the monetary policy framework in India is also awaited.
The report is expected to signal into which inflation indicator should be the focus of the monetary policy, the objectives for the central bank, and its liquidity management, among other factors.
Reporting by Subhadip Sircar