At the beginning of every month, various institutions or agencies release key economic data that indicates the performance of our overall economy. Analysing these data sets can help us make informed decisions and become intelligent stock market participants. In this jargon series, we shall discuss some of the important indicators that you can track and analyse every month.
Purchasing Managers Index (PMI)
Released by: IHS Markit India
Released on: The first week of every month.
PMI measures the industrial activity of a country. It gives us a preview of manufacturing activities before the actual industrial data is released. To calculate the index, IHS Markit selects purchasing managers and business executives of specific companies to answer a set of questions on business, employment, inventories. Based on their answers, a scale ranging from 0 to 100 is calculated. PMI is calculated for both the manufacturing and services sectors.
Analysis: A PMI above 50 represents an expansionary phase in the corresponding sector. If the PMI value is greater than that of the previous month, it signifies that the economy is improving over time. Similarly, a PMI below 50 represents contraction in the corresponding sector.
Wholesale Price Index (WPI)
Released by: Ministry of Commerce and Industry
Released on: 14th of every month.
The Wholesale Price Index (WPI) measures the changes in the price of goods sold and traded in bulk by wholesale businesses to other businesses. In simple terms, WPI is a measure of the wholesale price movements in the country. It includes only the prices of goods and does not include any items related to services.
Analysis: If the index keeps rising every month, it means that prices of goods are getting inflated at the wholesale level. This may lead to an increase in input costs for manufacturing companies, thus cutting short profit margins.
Consumer Price Index (CPI)
Released by: Ministry of Statistics and Program Implementation (MoSPI)
Released on: 17th of every month.
WPI tracks the prices of goods until the factory gate. However, The Consumer Price Index (CPI) measures the changes in the retail price level of general goods and services. These are goods that our Indian households buy for their daily consumption needs. CPI is also helpful in understanding the real value of wages, salaries, and pensions, and the purchasing power of a country’s currency
Analysis: Typically, CPI shows the inflation in the economy. An increase in CPI indicates that prices of essential retail goods are surging. The Reserve Bank of India (RBI) currently uses the Consumer Price index as the key measure of inflation to set the monetary and credit policy.
Released by: Every automobile manufacturer in India.
Released on: 1st of every month.
Every auto manufacturer operating in India has to report its monthly sales figures.
Analysis: We can compare the sales figures with that of the previous month as well as year-on-year (YoY) data to interpret the demand for vehicles. If overall sales have declined heavily, we can consider it as a bearish phase for auto manufacturers and auto ancillary companies, as their businesses have declined.
Released by: Telecom Regulatory Authority of India (TRAI)
When is it released? Towards the end of every month.
At the end of a month, TRAI publishes subscription reports of the leading telecom companies in India. The report consists of different characteristics of telecom users. However, there is a 2-month lag in the data provided by TRAI.
Analysis: As stock market participants, we can look at the subscriber addition of telecom players such as Reliance Jio, Airtel, Vodafone Idea. We can analyse the performance of a firm based on the tariff rates they provide. On the other hand, if a telecom player continuously loses subscribers, it tends to be critical for the company. Also, don’t forget to look at the Average Revenue Per User (ARPU) of telecos. An increase in ARPU is always desirable.
Insurance Premium Collection
Released by: Insurance Regulatory and Development Authority of India (IRDAI)
Released within the second week of every month.
Life Insurance and General Insurance companies ask for a premium from their insuree to get coverage for the corresponding segment. Every month, IRDAI publishes data on how much each insurance company collects as gross premium.
Analysis: We can analyse the performance of listed insurance players. We can compare IRDAI’s data with that of the previous month, as well as with the previous year. An increase in the overall premium collection might trigger a rally of insurance stocks.
Goods & Services Tax Collection Report
Released by: Ministry of Finance
Released on: The starting of every month
Both Central and state governments levy taxes on the goods and services sold in India. We have the Central GST (CGST) and State GST (SGST). At the beginning of each month, the ministry publishes the aggregate and state-wise GST collection report.
Analysis: We can interpret how the overall economy is performing while comparing the GST collection reports to those of the previous months. An increase in GST collection depicts that consumers are spending more money which, in turn, helps the economy and related companies.
Foreign Exchange Rate
Released by: Reserve Bank of India (RBI)
RBI quotes the rate of the Indian Rupee (INR) to foreign currencies (mainly the US Dollar) on a daily basis.
Analysis: At the beginning of every month, we can find out whether INR has become stronger or weaker. If the Indian Rupee is getting weaker every month, it is beneficial for exporting companies (and IT players as well), as they will be able to generate more revenue. Whereas, if the Rupee is getting stronger, manufacturers who import raw materials (crude oil, metals, minerals) only need to exchange fewer currencies compared to the previous month, which decreases their expenses.
Released by: Multi Commodity Exchange of India (MCX)
MCX provides tradable futures and options contracts on various commodities. As stock market participants, we can track the future prices of commodities such as gold, silver, copper, aluminium, crude oil, natural gas, etc.
Analysis: As major commodities are used as input by various manufacturers, the rise or fall of commodity prices can severely affect their expenses. For example, paint and adhesives manufacturers require crude oil as their input. The rise in crude oil prices can affect the margins of these firms.
Released by: Power System Operation Corporation (PSOC)
Released on: The last week of every month.
PSOC publishes reports on overall energy consumption, installed capacity of electricity generation, and distribution. However, there is a one-month lag in the data provided by PSOC.
Analysis: Increasing power demand and consumption can trigger a rally in the stocks related to the energy sector.