Economic & Inflation Update::IIFL

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Inflation- November Inflation at 9.11% vs 8.2 % (YoY ) Vs 10.0 % ( MoM)

·         Fuel Group -15.48 Vs  14.79% (MoM)

·         Manufacturing Products - 7.7% to 7.66% ( MoM)

·         Primary articles – 8.53% Vs 11.4 ( MoM)

View-  Inflation hopefully should continue to reduce on account of slowing growth and its consequent favorable impact on manufactured inflation. However, double-digit increase in MSPs, and approximately 20% depreciation in the rupee since August present an upside risk to inflation.

Economics- India’s industrial production contracted 5% YoY in October, 2011 as against a growth of 2% in September, 2011 on account of -

·         Slowdown in the capex cycle mainly driven by government policy rather than monetary policy.

·         Basic goods (5.9 vs 6.0), Intermediate goods (0.5 vs 11.4) , Consumer durables goods ( 4.5 Vs 14.2 ), Consumer non- durables ( 2.9 Vs 4.3 ) contracted in October, 2011

·         Other indicators include decline in Excise collections (YoY) for two consecutive months & deceleration in  export growth