Acuité comments on Core Sector - Oct'22

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research

"Core sector data print has been demonstrating a weakness from Q2 onwards in the current year due to the lack of a broad based momentum across the eight segments and this has continued in Oct-22 as well. At 0.1% YoY and flat sequentially, this is the weakest print since Feb-21. While the lack of momentum in industrial activity can be primarily attributed to the slowdown in the external environment and the resultant impact on exports, it has also been partly due to the base factor arising from a spike in core output last year in Oct-21. What has pulled down the overall core output in Oct-22 has been the unexpected sequential contraction in cement and refinery production, the latter possibly due to the windfall tax on exported petroleum products. Also, there was a material drop in electricity generation which may be due to the slowdown in manufacturing and better rainfall vs last year.

We expect the core sector output to witness only a moderate improvement in H2FY23 due to the seasonal factor but it will continue to be dragged down by the weakness in exports."

Source : Equity Bulls

Keywords

CoreSector October2022 Economy AcuiteRatings