Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India’s Industrial Production Index (IP) growth rose to 4.1% yoy in August from 3.8% yoy (revised from
3.3% yoy) in July. The IP release was significantly lower than the Bloomberg consensus forecast of 4.7% yoy and
our expectations of 4.5% yoy growth. Sequentially, IP declined by 0.9%, mom s.a. in August similar to the fall of
1.0%, mom s.a in July. On qoq; s.a. basis, the growth trend remained similarly weak.
Slowdown in IP numbers has been more than expected. Both the capital and consumer goods components of
IP experienced anaemic growth. While capital goods rose by 3.9% yoy in August after declining by 13.8% in July, it
declined on a sequential basis and is now the lowest since June 2010 on a qoq basis. Consumer goods growth
decelerated to 3.7% yoy from 7.7% yoy in July. This was on account of slower growth on both durables and nondurables.
The recent IP data, along with a host of other indicators, suggest growth is slowing faster than expected
and the consensus estimates of growth still need to come down. While IP has been volatile of late, the
downtrend is unmistakable. A broader set of indicators suggest a sharper slowdown. At the brink of contraction at
50.4, the September manufacturing PMI is the lowest since March 2009. The services PMI at 49.8 actually showed
a contraction for the first time since April 2009. Passenger car sales are still experiencing negative growth at 1.9%
yoy in September vs. -10.1% yoy in the previous month. Additionally, excise tax collections fell by 8% for the first
time in 16 months. Our GDP estimate of 7% in FY12 remains significantly below consensus estimates of 7.5%.
The latest IP print supports our view that the bar for the Reserve Bank of India (RBI) to hike again is very
high. The significant decline in domestic activity, the adverse global environment, falling asset prices, and
tightening financial conditions suggest to us that the RBI will likely pause on October 25. The key, however, will be
the WPI inflation print for September, which the RBI is watching very carefully for a slowdown in momentum on
inflation, particularly core. Our current forecast for the September WPI print to be released on October 14 is 9.7%
yoy. In our view, any downside surprise to that number will likely seal the case for a pause by the RBI.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India’s Industrial Production Index (IP) growth rose to 4.1% yoy in August from 3.8% yoy (revised from
3.3% yoy) in July. The IP release was significantly lower than the Bloomberg consensus forecast of 4.7% yoy and
our expectations of 4.5% yoy growth. Sequentially, IP declined by 0.9%, mom s.a. in August similar to the fall of
1.0%, mom s.a in July. On qoq; s.a. basis, the growth trend remained similarly weak.
Slowdown in IP numbers has been more than expected. Both the capital and consumer goods components of
IP experienced anaemic growth. While capital goods rose by 3.9% yoy in August after declining by 13.8% in July, it
declined on a sequential basis and is now the lowest since June 2010 on a qoq basis. Consumer goods growth
decelerated to 3.7% yoy from 7.7% yoy in July. This was on account of slower growth on both durables and nondurables.
The recent IP data, along with a host of other indicators, suggest growth is slowing faster than expected
and the consensus estimates of growth still need to come down. While IP has been volatile of late, the
downtrend is unmistakable. A broader set of indicators suggest a sharper slowdown. At the brink of contraction at
50.4, the September manufacturing PMI is the lowest since March 2009. The services PMI at 49.8 actually showed
a contraction for the first time since April 2009. Passenger car sales are still experiencing negative growth at 1.9%
yoy in September vs. -10.1% yoy in the previous month. Additionally, excise tax collections fell by 8% for the first
time in 16 months. Our GDP estimate of 7% in FY12 remains significantly below consensus estimates of 7.5%.
The latest IP print supports our view that the bar for the Reserve Bank of India (RBI) to hike again is very
high. The significant decline in domestic activity, the adverse global environment, falling asset prices, and
tightening financial conditions suggest to us that the RBI will likely pause on October 25. The key, however, will be
the WPI inflation print for September, which the RBI is watching very carefully for a slowdown in momentum on
inflation, particularly core. Our current forecast for the September WPI print to be released on October 14 is 9.7%
yoy. In our view, any downside surprise to that number will likely seal the case for a pause by the RBI.
No comments:
Post a Comment