The Indian Sensex today witnessed a decline, attributing the fall to the majority of stocks trading in the red. However, the Industrial Production Index (IIP) data released on Friday presents a much-anticipated growth trend, recording 5.8% growth in September 2023, compared to 3.3% in 2022. This positive IIP growth rate reflects an overall increase in consumption, particularly in the consumer durables and non-durables sectors, which has been made possible due to rising incomes, easy consumer finance availability, and an increase in consumer demand.
However, the slower industrial growth could adversely affect employment opportunities in rural and semi-urban areas, subsequently impacting consumer confidence and overall consumption. With consumer confidence likely to take a hit, the reliance on domestic growth will become increasingly pivotal amid a slowing global economy. Despite the decline in industrial growth from August 2023, the September 2023 IIP numbers align with economists’ projections of a positive IIP growth rate. While sectors such as mining and power witnessed robust growth, this promising impact may be mitigated by moderation in manufacturing growth and the decline in consumer durables demand.
Moreover, the following US inflation data could potentially impact the decisions of the Federal Reserve, particularly on whether to halt or increase interest rates. As a result, the focus on US inflation data is expected to remain central in the context of influencing market sentiments. Gold prices are forecasted to remain subdued as there is anticipation regarding the Federal Reserve’s decisions on interest rates, particularly in light of how it may affect inflation.