Showing a pick up in the economic momentum, the SBI Composite Index has inched higher November 2015, stating that country's manufacturing sector growth improved both in terms of month-on-month as well as yearly basis. The yearly SBI Composite Index, an indicator for manufacturing activity in the country, hit six month high in November, increasing to 54.5 from 53.5 in the previous month, while the monthly Index improved to 51.6 in November from50.9 in October.
The SBI research report though pointed that mining and electricity are still acting as a drag on the economic activity and the upturn has majorly been driven by manufacturing. The pickup in economic momentum was supported by positive trends in capital goods sector. SBI Index also highlighted that the index numbers indicate acceleration in industrial production in coming months.
The research has stated that looking ahead; the credit growth is expected to improve in infrastructure sectors like power and roads. A smart growth is also expected in personal loan segment particularly in housing. The Seventh Pay Commission report is likely to have a positive impact on steel and cement industries. Additionally, healthy order book if coupled with faster execution will show positive results for the capital goods and infrastructure sector. There is an immediate need to increase import duty on long steel products.
The SBI Composite Index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. An index value of 42 to 46 means (moderate decline), 46 to 50 (low decline), 50 to 52 (low growth), while 52 to 55 means (moderate growth) and above 55 high growth.