Penultimate months before the year draw to close is succulent with forebodings of economic movements all over. The Indian economy after a rattling experience in 2013 is poised for breather. Economic indicators released during the last couple of days emanate hope of activity in Q4.

The wholesale price index (WPI), the country's main inflation indicator, climbed an annual 6.16 per cent last month, its slowest pace since July 2013. Wholesale prices had increased 7.52 per cent on year in November - their fastest clip in 14 months.

Wednesday's WPI data follows an easing in consumer inflation that slowed to a three-month low of 9.87 per cent last month.

The latest inflation numbers are expected to give the Reserve Bank of India (RBI) some leeway to keep interest rates on hold at its upcoming policy meeting on Jan. 28.

The benchmark 10-year bond yield fell 5 basis points to 8.63 per cent from levels before the data. The benchmark 5-year swap rate and the 1-year rate each fell 4 basis points, dealers said.

After raising interest rates twice since September, the RBI left rates steady last month, ignoring high inflation readings as it feared aggressive rate hikes could be damaging for a weak economy. A surprise contraction in industrial production in November by -2.7% and PMI clung precariously in the expansionary zone at 50.7 after falling from 51.3 in November.

In the backdrop encouraging drop in WPI inflation RBI might just tweak the lending rate in January 28th review meeting perking the economic growth and consumption in the twilight 2013-14.

Likewise waves of economic events are in offing in US after The Federal Reserve holds its next policy meeting on Jan. 28-29. Even though at Fed's December 17-18 meeting, the central bank announced its plan to reduce monthly asset purchases by USD 10 billion to USD 75 billion, came as an encouragement for the market backed by improved economic indicators experts believe that Fed would go slow on tapering since a much needs to be done before turnaround is accomplished.

US retail sales edged up in December with a core spending gauge posting a big jump, a sign the economy gathered steam at the end of last year and was poised for stronger growth in 2014. Unemployment rates in US are expected to remain at a five year low of 7.0 per cent.

However a major concern of slow inflation continues to bother economists who had targeted 2% towards the end of stimulus. Low inflation signifies that a lot still remains to be done before economic growth picks up and stays yielding better demand and sales.

One of main focus of new Fed Chairman Janet Yellen would be to trigger growth and inflation of at least 2% before the bond buy back scheme will be called off. EU economy has been delving in low inflation zone indicating much needs to be done before the lending rates can be increased.

As a result of these liquidity enhancing measures the market is expected to not only remain fluid but also pick up on demand and activity as economic activity picks up in full swing after the receding winter. Chinese spring festival in 1st week of February is likely to kindle buying towards the end of January as prologue to hiked construction activity after the holiday.