India Insight:Export growth accelerates further;India well placed for Fed move in Dec

Monthly trade deficit widens to US$10.2bn (5.6% of GDP annualized) inOctober as imports picked up faster than exports: This compares toUS$8.3bn (4.7% of GDP annualized) registered in September. On a 3-monthtrailing basis, trade deficit widened to 4.8% of GDP annualised in Oct vs. 4.4% of GDP in the previous month.

Goods export growth (in dollar terms) in October picks up to highestsince May 2014: Goods export growth was up +9.6%YoY (vs. +4.6%YoY inSept). Looking at the break down, the pick-up in exports during the month ofOct was broad based largely led by gems & jewellery (+22%YoY),engineering goods (+14%YoY), iron ore, petroleum products, ready-madegarments, etc amongst others.

Goods import growth (in dollar terms) moves into positive territory afterdeclining for 22 consecutive months: Goods imports grew +8.1%YoY (vs. -2.5%YoY in Sept) partly on favourable base effect. In terms of commoditycomposition, (a) oil imports were up 4%YoY in Oct on some rebound in global crudeoil prices, (b) gold imports also picked up to US$3.5bn (vs. US$1.8bn in Sept) onfestive season demand, and (c) non-oil non-gold import growth an indicator ofdomestic demand, moved into positive territory (1.9%YoY vs. -3.5%YoY in Sept).

Looking at the breakdown the trend was mixed - while some rebound was seen inimports of peals & precious stones, transport equipment and raw cotton etcamongst others, a decline was seen in other categories including iron & steel andfertilizers etc.