Reaction to IIP numbers - Mr Harsh Pati Singhania

The IIP numbers remain a matter of concern. The data also indicates that manufacturing is a laggard and capital goods growth continues to be in the negative zone. Overall, the fiscal year 2012-13 will continue to be a challenging year for the business with pricing power being particularly being affected by lower demand growth. The silver lining is that the numbers for May 2012 are slightly better than April 2012.

One has to watch for monsoon's behavior before drawing conclusion about manufacturing and industrial growth in the coming months. The RBI stance and policy on the trade-off growth between containing inflation and growth is another factor that would influence future performance. It is hoped that the policy will gradually move towards softening of interest rate regime, even if some inflation stubbornness persists, to help growth over the rest of the fiscal year.

Source : Equity Bulls

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