Index of Industrial Production (IIP) - April 2013 - ZENMoney

Index of Industrial Production (IIP): The IIP numbers for April has come in at a lower than expected 2% due to negative growth in mining sector and weak growth in the Electricity sector. Although the April figures are higher compared to a contraction of 1.3% recorded in April 2012, it is lower than the 2.5% witnessed during March 2013.

Sectors: On a sectoral front - Mining, Manufacturing and Electricity sectors for the month of April 2013 witnessed growth of (-) 3.0%, 2.8% and 0.7% as compared to (-) 2.8%, (-) 1.8% and 4.6% respectively in April 2012.

Industry: Thirteen out of the twenty two industry groups in the manufacturing sector have shown positive growth during the month of April 2013 as compared to the corresponding month of the previous year. The industry group 'Wearing apparel; dressing and dyeing of fur' has shown the highest positive growth of 86.6%, followed by 25.4% in 'Electrical machinery and apparatus n.e.c.' and 19.9% in 'Furniture; manufacturing n.e.c.'. On the other hand, the industry group 'Office, accounting & computing machinery' has shown a negative growth of 38.9% followed by 28.1% in 'Radio, TV and communication equipment & apparatus' and 12.0% in 'Medical, precision & optical instruments, watches & clocks'.

Use Based: As per Use-based classification, the growth rates in April 2013 over April 2012 are 1.3% in Basic goods, 1.0% in Capital goods and 2.4% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 8.3% and 12.3% respectively, with the overall growth in Consumer goods being 2.8%.

IIP Trend-Recap

India's industrial production has remained volatile in the recent months mostly driven by poor demand amid political inaction and weak exports.

Outlook

The volatility in the IIP numbers is not surprising considering that India's current economic growth is at a decade low. Broad based slowdown in electricity, mining, consumer durables is likely to continue for some more time due to weak demand outlook both at domestic and global levels. Continuing weakness in the IIP numbers could add pressure on the RBI to cut interest rates in its upcoming policy meet on June 17th.

Source : Equity Bulls

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