UBS: pause in official rate hikes in H2 likely

India: IP pause continued
􀂄 Big picture is India industrial production was always going to be softer
in 2010-11 after the very strong 'V' shape last year. Our lead economic
index is still weaker. Slowdown most evident in capital goods which are
coming off extreme highs. Elsewhere basic goods, intermediate goods
and consumer goods are simply treading water. Chart 2 is key to watch -
here we expect some upward revision to August data, just as we saw to
July’s. But fundamentally the lack of fresh momentum is due to: slower
exports and bank lending which has stopped accelerating. We still
expect 10-11% IP by FY-end following sub-10% in the immediate
quarter ahead. This environment implies slower WPI and a pause in
official rate hikes in H2