IIP, CPI AND TCS... ALL DISAPPOINT

By Ruma Dubey

It was a bad set of numbers – both IIP for November as well as CPI for December. And then to top it all off, TCS announced its Q3FY16 numbers and they were much, much below analyst expectations. Thank god these numbers came in after market closure or else the already lackluster market, with a strong inclination towards a fall, would have only come down further!

IIP numbers came in much worse than expected. If October IIP had come in at a jaw dropping 9.8% and manufacturing at 10.6% was the biggest contributor, in November, the very same manufacturing pulled down the IIP. It came in at degrowth of 3.2%. And manufacturing slipped from an over 10% growth in Oct to a degrowth of 4.4% in November. With many factories closed for Diwali, which fell in Nov, manufacturing was also hit badly. Companies had most likely drawn on inventories, rather than increasing production.

In terms of industry, 17 out of the 22 groups in the manufacturing have shown a negative growth, prominent amongst them being electrical machinery & apparatus, luggage, handbags, saddlery, harness & footwear; tanning and dressing of leather products, Wood and products of wood & cork except furniture; articles of straw & plating materials and furniture showed the highest positive growth, followed by office, accounting & computing machinery and Radio, TV and communication equipment & apparatus.

Some important items showing high negative growth during the current month over the same month in previous year include ‘Cable, Rubber Insulated, Heat Exchangers, Polythene Bags including HDPE & LDPE Bags, Tractors, Conductor, Aluminium’, Rice and three wheelers (including passenger & goods carrier).

On the other hand, some of the important items  that have shown a high positive growth are Gems and Jewellery, Sugar Machinery, Lubricating oil, Wood Furniture, PVC Pipes and tubes, transformers (small), polypropylene (including co-polymer) and sugar.

The Consumer Price Index (CPI) for December rose to 5.6% v/s 5.41% in November. December is the fifth consecutive month when CPI has risen consistently.

Internals of the CPI: (MoM)

• Food iflation at 6.4% v/s 6.07%
• Rural inflation at 6.32% v/s 5.95%
• Urban Inflation at 4.73% v/s 4.71%

This is not going to go down too well when the markets open for trading tomorrow. Neither IIP and CPI nor TCS, none of them are going to go down too well with the markets. The triggers will be Q3 numbers only as immediately in the coming days, there is really no policy action, neither from the Govt nor from the RBI expected.