Economic downturn: India's Jul-Sep qtr GDP numbers crucial, says report

India's July-September quarter Gross Domestic Product (GDP) data, scheduled for a release on November 29, will be important as headline growth has already slipped to a six-year low, said Singapore's DBS Bank in its daily report on Tuesday. "Headline growth has already slipped to a six-year low of 5 percent Y-o-Y in the quarter ending June," said the bank.

A disappointing GDP report could lift USD/INR above its two-month range between 70.5 and 71.5 and bring it closer to the year's high around 72.5, believes DBS. The Indian rupee depreciated to 71.47 from 71.29 on Monday, noted the bank.

India's industrial production contracted sharply by 4.3 percent Y-o-Y in September against the 2.5 percent consensus. August's contraction was revised down to 1.4 percent from 1.1 percent. The weakness was broad-based, cutting across capital goods, consumer durables, and infrastructure and construction.

In particular, the sharp 20.7 percent decline in capital goods production did not bode well for investment, a sign that the economic slowdown has become entrenched, according to the bank. In its Monday report, DBS said it expected the 2QFY20 GDP to show that the economy slowed further against 5 percent in the first quarter.