India's manufacturing activity slackened in December 2013 - Eastern Financiers

India's manufacturing activity slackened in December compared with the previous month because of sluggish domestic orders, a private survey showed, indicating a continued drag on country's industrial recovery. The HSBC Purchasing Managers' Index (PMI) for manufacturing was down to 50.7 points in December from 51.3 in November. A reading of over 50 on this surveybased index shows expansion while below that signals contraction. However, this was the second straight month of growth after three successive months of contraction till October. The PMI report is based on a survey of 500 private sector firms and not on actual production or output, which is why its findings are considered only a broad indicator of the trends in the manufacturing sector. The sub-index that measures new orders fell to 51.3 in December from 51.9 in November, explaining the decline in output in December. However, the companies surveyed indicated a pickup in exports order growth. The backlogs of work rose again during the latest survey period, with the rate of accumulation climbing to a six-month high.

Stating that more sectors will report revenue expansion in the December quarter, rating agency CRISIL said that revenue growth has bottomed out, but margin growth may take more time. It said apart from the export-oriented firms like IT, pharma and textiles, the domestic consumption-linked sectors will see moderate improvement as rural demand is expected to pick up after good monsoons. The weak growth in investment-linked sectors is not expected to deteriorate further, and the recent clearances from the Cabinet Committee on Investments and lifting of the ban on iron ore mining will lead to a sustained recovery in the sector in 2014-15, the ratings agency said. However, revenue expansion will not necessarily help profitability as the agency expects that margins will not expand till FY15.

Source : Equity Bulls

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