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The sharp widening in India's merchandise trade deficit in October to a record level, fuelled by a broad-based rise in imports, will likely be an outlier, analysts said.

India's merchandise trade deficit rose to an all-time high of $31.46 billion in October, widening sharply from the $19.37 billion print in the prior month. Imports jumped from $65 billion from $53.8 billion.

"On a sequential basis, about 70% of the uptick in imports in October is led by oil, gold and silver imports," Morgan Stanley said in a note. The increase in gold and sliver imports can potentially be attributed "to certain lumpiness" in demand ahead of the Diwali festive season, it added.

On the increase in oil imports, IDFC First Bank said it probably "reflects some front-loading of imports" with crude oil prices having declined in October.

On a monthly annualised basis, India's trade deficit rose to 10.4% of GDP in October from 6.4% of GDP in September.

"Despite the shock on the trade deficit front, we retain our FY24 current account deficit (CAD) estimate at 1.9% of GDP," Gaura Sen Gupta, economist at IDFC First Bank, said.

"This is because the October print is likely to be a one-off, with gems and jewellery imports likely to normalize from November onwards."

Further, the easing of oil prices provides a bit of buffer, Gupta said. Brent crude is down about 8% in November, having fallen by about the same margin last month.

Morgan Stanley said the elevated October trade deficit was likely to be an outlier.

"We anticipate the trade deficit to moderate considerably in November and December," it said, estimating the CAD for the December quarter to be within 2-2.4% of GDP.

Sakshi Gupta, principal economist at HDFC Bank, said she was not having a re-look at the CAD estimate or the USD/INR forecast for now in light of the October's trade deficit numbers.