IIP - April 2013 - Microsec

India's Industrial Production grew by 2.0 percent YoY during April 2013 vis-a-vis a revised 3.4 percent YoY growth registered in March 2013 (revised upwards from 2.5 percent YoY). The reading of January 2013 has also been revised up to 2.5 percent YoY against earlier estimates of 2.4 percent YoY. The revisions have been mainly on account of increase in Manufacturing sector growth numbers. April's number is totally unsatisfactory as it comes on the back of a low base of April 2012 when the Industrial Production had reported a 1.3 percent YoY contraction. During the month, Manufacturing and Electricity registered positive growth while Mining remained in negative territory. Among the use based components, Consumer Durables heavily dragged down the growth of the overall index. In value terms, the Index of Industrial Production (IIP) decreased to 167.3 in April against 194.0 in March 2013, registering a sequential fall of 13.8 percent. On a seasonally adjusted basis also, IIP actually contracted sequentially.

Outlook: The weaker than expected Industrial Production number reflects that the revival related indications have not yet come out. However, we still expect a gradual recovery in FY2013-14 on account of further monetary easing by Reserve Bank of India (RBI). However, further development on structural reforms is unlikely before the monsoon parliamentary session. Lower base of last year will also support the Industrial growth number going forward.

Source : Equity Bulls

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