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A general view of the Jawaharlal Nehru Port Trust (JNPT) is pictured in Mumbai, India, July 31, 2015. Mumbai's commercial seaport handles over half the container traffic through India's major ports.Reuters file

India had reasons to cheer both on the inflation and external trade fronts. Data for October released by the government on Tuesday showed that retail inflation dropped to a 14-month low of 4.20 percent, while exports rose 9.5 percent despite a sluggish global economy. Gold imports increased 108.3 percent to $3.50 billion from $1.68 billion in October 2015 and trade deficit to $10.1 billion.

Exports stood at $23.5 billion in October when compared to $21.4 billion in October 2015, aided by an increase in two key categories — gems and jewellery and engineering goods.

Gems and jewellery exports rose 21.8 percent to $4.38 billion from $3.59 billion in October 2015, while engineering goods saw 13.8 percent jump to $5.26 billion in comparison to $4.6 billion in the corresponding period last year. The trend was fairly consistent, with 18 of the 30 categories recording growth on a year-on-year (YoY) basis. Export of petroleum products grew 7.2 percent to $2.7 billion.

Imports grew 8.11 percent to $33.6 billion from $31.1 billion in the year-ago period, widening the trade deficit for October 2016 to $10.1 billion from $9.69 billion, YoY. 

Crude oil import bill widened 3.98 percent to $7.1 billion, YoY.

The cumulative trade deficit for the April-October 2016 period was $53.1 billion, down 32 percent from $78.2 billion in the corresponding period last year.

The provisional data for October 2016 were released by the Indian government on Tuesday evening after stock market hours.

The consumer price inflation (retail inflation) dropped to a 14-month low of 4.20 percent for October, according to provisional data released by the government on Tuesday. Food price inflation eased to 3.32 percent as against 3.96 percent (final) in the previous month.

The fall makes a strong case for a rate cut by the RBI's MPC when it meets next month.

"October inflation at 4.2 percent remains much below the RBI's target range and lower than its estimates for 3QFY17 and 4QFY17. This should set up the RBI for a 25 bps repo rate cut in December," Suvodeep Rakshit, an economist at Kotak Institutional Equities, said in a note.

Angel Broking said that the rate cut could happen soon. "There could be further softening in the inflation in the near term, as demand side is likely to get impacted due to demonetisation. This raises the probability of rate cut coming in earlier than expected," Vaibhav Agrawal (VP Research & Head of Research, Angel Brokingsaid in a note.

The BSE Sensex ended at 26,304, down 514 points, or 1.92 percent, while the NSE Nifty closed 198 points, lower, or 2.39 percent, at 8,098. 

Top Sensex losers included Tata Motors (9.88 percent, to Rs 457), Tata Steel (7.88 percent, to Rs 393), Asian Paints (7.41 percent, to Rs 892) and Maruti Suzuki (5.71 percent, to Rs 4,842).