Factory output registers growth of 2.7 percent in August; beats estimates

12 Oct 2012 Evaluate

In a positive surprise, India’s index of industrial production (IIP), a key measure of industrial output registered decent growth of 2.7 per cent in August 2012 at 165.7, lower than the growth rate of 3.4 percent in the corresponding period last year, but way above the consensus estimates of sub 1 percent growth figure. Further, the number was also higher than July month’s negligible growth figure of 0.1 per cent, which was later revised to -0.2 per cent. Meanwhile, the cumulative growth for the period April-August 2012-13 over the corresponding period of the previous year stands at 0.4 per cent.

The industrial output has remained fragile in the past few months as growth in all three sectors viz. mining, manufacturing and electricity got dampened. However, this time around, exhibiting expansion, the manufacturing sector, which constitutes about 75.53 percent of industrial production, grew at 2.9 per cent as against a contraction of (-) 0.2per cent in July. Nevertheless, even mining sector, which constitutes about 14.6 percent of industrial production, grew at 2 per cent emerging from its contraction of (-) 0.7 per cent in July. However, growth in electricity sector dropped to 1.9 percent versus a growth figure of 2.8 percent in July. The cumulative growth in the three sectors during April-August 2012-13 over the corresponding period of 2011-12 has been (-) 0.6 per cent, 0.0 per cent and 4.8 per cent respectively.

However, Capital goods output, a key investment indicator, clearly continued to be a disappointment as capital goods production witnessed a decline of 1.7 percent on y-o-y basis highlighting that companies are still wary of making investments in high-interest and uncertain economic climate. Consumer goods, on the other hand, grew at 5 per cent, driven by robust growth of 4 percent and 5.8 per cent in consumer durables and non consumer-durables, respectively.

Industrial output, which accounts for a little over 15 percent of gross domestic product (GDP), despite beating street expectation, highlights continuing weakness for the economy, which languished near a three-year low of 5.5 percent annually in the three months to June.

What comes as the disappointment is the September Consumer Price Index (CPI) inflation, which has risen to 9.73% year-on-year, up 10.03% month-on-month. Thus, with this inflation going high and industrial sector showing continued weakness, the economy seems to be well placed in a typical stagflationary situation, which reduces the chances of RBI reducing its key policy rates, viz, repo and reverse repo. Further, the RBI, in its Second Quarter Review of Monetary Policy 2012-13 on October 30, is expected to go ahead with its tried and tested method of reducing CRR (cash reserve ratio), that helps banks lower their cost of funds and increase lending.

SEBI Registered: Investment Adviser - INA000013323

Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Disclaimer: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provides any assurance of returns to investors.

Compliance Officer:

Name: Shrikant Jagtap

Email: shrikant.jagtap@moneyworks4me.com

Mobile No: +91 97638 00745

Grievance Officer:

Name: Mukta Vaze

Email: mukta.vaze@moneyworks4me.com

Mobile No:+91 98609 19463

Principal Officer:

Name: Atharva Bhide

Email: atharva.bhide@moneyworks4me.com

Mobile No:+91 91758 99463

SEBI regional/local office address -

Plot No. C 4-A , G Block, Near Bank of India, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra 400051

Address:

The Alchemists Ark Pvt. Ltd., B-101, Signet Corner Building, Balewadi Phata, Baner, Pune, Maharashtra 411045

Data provided by Accord Fintech Pvt. Ltd.

Name of the IA registered with SEBI:	The Alchemists Ark Pvt. Ltd.
Logo:
Trade/Brand Name of IA:	MoneyWorks4Me Investment Advisers
Brand Logo:
SEBI Registration Number:	INA000013323 Validity - May 16, 2019 - Perpetual
Registration:	Non-Individual
BSE Enlistment No:	1187
Address:	B-101, Signet Corner Building, Balewadi Phata, Baner, Pune, Maharashtra 411045
Compliance officer Details:	Name: Shrikant Jagtap Email: shrikant.jagtap@moneyworks4me.com Telephone: +919860359463 Address: Same as IA
Grievance Officer Details:	Name: Mukta Vaze Email: mukta.vaze@moneyworks4me.com Telephone: +91 98609 19463 Address: Same as IA
Principal Officer Details:	Name: Atharva Bhide Email: atharva.bhide@moneyworks4me.com Telephone: +91 91758 99463 Address: Same as IA
Standard Warning:	Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Disclaimer:	Registration granted by SEBI, enlistment with exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Factory output registers growth of 2.7 percent in August; beats estimates

Do your Financial Planning

Invest using Quality-at-Reasonable-Price(QaRP)

Know the opportunities right

Invest with conviction

Read How the Heck to Invest and Reach Nirvana,