Showing signs of modest recovery, the SBI Monthly Composite Index, a leading indicator for manufacturing activity in Indian Economy, inched up from 46.8 in April 2015 to 53.8 in May 2015. The SBI Research Report has however cautioned that going ahead 'weak demand conditions' may persist that could have a negative impact on the industrial output numbers.
The report further added that due to continued tepid credit growth and subdued commercial vehicle sales in recent period, a negative impact may precipitate in June/July 2015 IIP. SBI further added that 'overall, with economic growth currently patchy and plagued with weak demand and low capex, corporate earnings are likely to remain subdued for most sectors barring few exceptions.
The report has however pointed that infrastructure activities will start possibly from the second half of this year as the Government would be in a position to push the projects and added that with the Government doing its bit, it is imperative to improve sentiments further through another round of monetary easing.
Meanwhile, the yearly SBI Composite Index for May 2015 decelerated to 56.4 in May from 58.2 in April 2015, due to entrenched disinflationary impetus and weak demand. An index value of less than 42 means large decline, while value of 42 to 46 means (moderate decline), 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 high growth.
