Industrial activity grew a meager 0.1% YoY in July, way below our 1% expectation. Weakness was prevalent across the board, with both investment and consumption related components posting a downtrend. Ergo, April-July industrial production growth is largely flat YoY. In specific, while both mining and manufacturing contracted during the month, electricity was weak on account of poor hydropower generation. Forward looking indicators such as intermediate goods production or PMI point towards continued weakness in overall activity in coming months, although low base effect will provide some support during later part of the year. As regards monetary policy, we expect a status quo in September policy review as RBI remains focused on headline inflation, which is still elevated.
Regards,
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