IIP Disappoints Again - CPI Provides Glimpse Of Hope
DSIJ Intelligence / 12 Mar 2014
While the IIP for the January 2014 has expanded marginally by 0.10%, the CPI for the February 2014 stood at 8.10%. Markets may take it as a positive move as this provides some space to RBI to take a dovish stance.
The markets today waited for two important announcements one was the Index of Industrial Production (IIP) announcement and second was Consumer Price Index (CPI). The figures were announced after the market hours. Let’s take a look at the figures one by one.
The IIP which shows the exact position of the manufacturing industry in the country witnessed marginal improvement for the Month of January 2014. The data announced by the central statistical office shows that the IIP for the month of January 2014 stood at 182.20 as compared to 179 in December 2013 and 182 in January 2013. This means the YoY growth in IIP is only 0.10. If we consider the figures from April 2013 to January 2014, the IIP growth is nil.
If we get into the details of the details of all segments, the mining witnessed marginal improvement of 0.7%. However over the cumulative from April 13-January 2014, there was a negative growth of 1.50%. In the manufacturing segment, there was a negative growth of (-0.7%) and on the cumulative basis there was de-growth of 0.4%.
Electricity was the best performer as the growth in January month was 6.50% and cumulative growth stood at 5.7%. The Capital goods was the biggest disappointment as for the January 2014 there was a de-growth of (-4.20%). While the Consumer goods remained almost stagnant, Consumer non durable witnessed traction for the month.
On the CPI Front, there was some respite for the investors as the CPI for the February 2014 stood at 8.10%. This was lower than the 8.90% in January 2014. While the overall CPI is lower, there are few problem areas. The fruits and vegetable inflation is still higher with 15.79% and 14.04% respectively. Even the milk and products witnessed a hike of more than 10%.
If we consider both the data, we feel the markets may take it marginally positively. Reason being the inflation is contracting and IIP has also contracted. This provides a best Case scenario to the RBI governor. However whether the RBI really takes the dovish stance needs to be seen.
We are of the opinion that the un-seasonal rains have impacted the crop in many Areas of Maharashtra and even few other states. This May result in inflation moving northwards. So according to us the possibility of RBI taking a dovish stance seems to be a distant possibility.
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