Core Sector Data - Feb 2021 - Acuité Ratings & Research

Mr.Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on the Core Sector Data - Feb 2021

"The core sector data released for Feb 2021 reinforces the concerns on the pace of the industrial recovery and the likelihood of meaningful positive GDP growth in Q4FY21. With the overall core sector index witnessing a YoY decline of 4.6%, the risks of a material contraction in IIP for the month, on the back of a 1.6% decline already seen in Jan 2021, has visibly increased. The contraction in the core sector is broad-based with all eight sectors recording a decline from the Feb 2020 levels. The largest decline is in refinery output which reflects a weaker than expected demand for retail fuels partly arising from the increased fuel prices apart from the continuing impact of the pandemic on overall mobility. What is noteworthy is the sequential month-on-month drop in steel and cement output even factoring into the fact that Feb has lesser working days. However, coal output has seen a very steady sequential rise post-monsoon since Sep 2020 while power generation growth has been YoY positive except for Feb where it showed a nominal contraction. Notwithstanding the disappointing sequential momentum in the core sector, Acuité expects a better core sector performance in March particularly given the favourable base due to the national lockdown that started a year back."

Source : Equity Bulls

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