Economy: Industrial growth remains subdued; inflation increases :: ShareKhan PDF Link

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Monthly economy review   Economy: Industrial growth remains subdued; inflation increases In January 2012, the Index of Industrial Production (IIP) grew by 6.8%, which was significantly higher than the market's expectations. The higher than expected performance was led by a strong growth in the manufacturing sector (up 8.5% year on year [YoY]) and a sharp jump in the non-durable consumer goods sector.  The Wholesale Price Index (WPI)-based inflation for February 2012 came in at 6.95%, higher than the Street's expectations. The inflation rate for December 2011 too has been revised upwards to 7.74% from the provisional figure of 7.47%. The growth in exports remained weak showing an increase of 10.1% YoY (up 6.7% in December 2011). Imports grew by 20.3% YoY (up 19.8% in December 2011). The trade deficit for January 2012 came in at $14.7 billion, higher than the trade deficit level recorded in December 2011. The trade deficit increased by 117.9% YoY.  Banking: CRR cut by 75 basis points; interest rates likely to decline in Q1FY2013 In its last policy meeting, the Reserve Bank of India (RBI) had maintained the status quo on the interest rates. However, prior to the monetary policy the RBI had reduced the cash reserve ratio (CRR) by 75 basis points (125 basis points since January 25, 2012). However, at the March 15th mid quarter policy review the RBI kept the rates unchanged. Going ahead, if inflation moderates or the government initiates steps for fiscal consolidation the RBI may reduce the repo rates in the April 17th policy review meeting. The credit offtake registered a growth of 16.4% YoY (as on March 9, 2012), which was higher than the growth of 15.8% recorded in the previous month (as on February 10, 2012). The credit growth is in line with the RBI's guidance of 16%. The deposits registered a growth of 13.9% YoY (as on March 9, 2012), which was lower than the 15% year-on-year (Y-o-Y) growth seen during the previous month (on February 10, 2011). The growth in the deposits has fallen due to the higher yields offered by the other debt instruments. The credit-deposit (CD) ratio was at 76.7% (as on March 9, 2012), higher compared with the 75.6% CD ratio as on February 10, 2012. Meanwhile, the incremental CD ratio increased to 109% for the period, which was higher than the ratio seen during the previous month, reflecting a slower deposit growth and tighter liquidity in the market.  The yields on the government securities (G-Secs; of ten-year maturity) stood at 8.6% as on March 28, 2012, in line with the previous month's levels. The G-Sec yields across the long-term maturities have increased on a month-on-month (M-o-M) basis. Equity market: FIIs remain buyers  During the MTD period in March 2012 (March 1-26), the FIIs were net buyers of equities and the domestic mutual funds were net sellers of domestic equities. For the MTD period in March 2012 (March 1-26), the FIIs bought equities worth Rs8,702 crore while the mutual funds sold equities worth Rs1,081 crore. Click here to read report: Investor's Eye