By Motilal Oswal Securities
** Jul-12 IIP growth at 0.1% was still lower than significantly beaten down expectations (MOSL 1.5%, Street 0.5%) and belied any expectation of revival soon.
With this, the YTDFY13 IIP growth showed no expansion (-0.1%) in contrast with 6.1% growth in YTDFY12.
** All sub-sectors displayed negative or very low single digit growth signifying widespread slowdown pointing towards recessionary condition. However, an electricity blackout during the month added to the woes.
** Manufacturing remained negative for the second successive month (-0.2%).Mining sector that briefly came up into positive territory in Jun-12 turned negative once again (-0.7%). The electricity sector that had remained in high single digit so far showed a sharp slowdown (2.8%) partly on account of the blackout.
** As per the use based classification, basic goods too slowed down but remained in the positive territory (1.5%). The degrowth of capital goods sector was of lower order (-5.0% compared with -27.9% of Jun-12).
** Crucially the performance of the consumer sector turned tepid on both durables (1.4%) and non-durables (0.1%) front with an overall growth of 0.7% - the weakest in five months. Thus there are signs that the consumption story that had sustained growth is too giving up.
** The data for Apr-12 has been revised down to -1.3% from -0.9% estimated earlier while Jun-12 data has been kept unchanged at -1.8% in their first revision. That the Jul-12 IIP failed to capitalize on a somewhat lower base point to the recessionary conditions prevailing now instead of a slowdown. Going forward, we expect modest growth only in months helped by a negative or very low base.
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