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The Industrial Production Index (IP) grew 3.7% yoy in January, above the revised 2.5% yoy (from 1.6% yoy)
growth in December. The IP reading was higher than the market consensus of 2.9% yoy and largely in line with
our expectations of 3.4% yoy growth. Sequentially, IP rose 1.2 % mom, s.a. in January after 2.0% mom growth in
December.
The upward surprise was mainly due to a spike in consumer goods. Consumer goods increased by 11.3% yoy
as compared to 3.7 % yoy in December, driven by high growth in both consumer durables and consumer nondurables. Durable goods continued to grow at an elevated 23.3% yoy, after the 18.8% yoy growth in the previous
month. Consumer non-durables growth rebounded to 6.9% yoy after being negative in the last couple of months.
The lumpy Capital Goods Index declined sharply by 18.6% yoy after the fall of 9.3% yoy in previous month.
The January reading of IP suggests that activity is not decelerating sharply, and is in line with other robust
activity indicators. Recent data on PMI, motor vehicle sales, and non-oil import growth have been robust.
We expect the Reserve Bank of India (RBI) to hike policy rates by 25 bp in the March 17, 2011 meeting.
Beyond that, we believe the RBI will hike policy rates by another 50 bp in calendar year 2011. WPI inflation
numbers for February will be released on March 14, and we expect it to come in at 7.8% yoy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The Industrial Production Index (IP) grew 3.7% yoy in January, above the revised 2.5% yoy (from 1.6% yoy)
growth in December. The IP reading was higher than the market consensus of 2.9% yoy and largely in line with
our expectations of 3.4% yoy growth. Sequentially, IP rose 1.2 % mom, s.a. in January after 2.0% mom growth in
December.
The upward surprise was mainly due to a spike in consumer goods. Consumer goods increased by 11.3% yoy
as compared to 3.7 % yoy in December, driven by high growth in both consumer durables and consumer nondurables. Durable goods continued to grow at an elevated 23.3% yoy, after the 18.8% yoy growth in the previous
month. Consumer non-durables growth rebounded to 6.9% yoy after being negative in the last couple of months.
The lumpy Capital Goods Index declined sharply by 18.6% yoy after the fall of 9.3% yoy in previous month.
The January reading of IP suggests that activity is not decelerating sharply, and is in line with other robust
activity indicators. Recent data on PMI, motor vehicle sales, and non-oil import growth have been robust.
We expect the Reserve Bank of India (RBI) to hike policy rates by 25 bp in the March 17, 2011 meeting.
Beyond that, we believe the RBI will hike policy rates by another 50 bp in calendar year 2011. WPI inflation
numbers for February will be released on March 14, and we expect it to come in at 7.8% yoy.
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