IT WAS GOOD NEWS ALL AROUND!

It was good news. IIP and CPI, both were good.

IIP for Oct, thanks to the festive demand of Diwali, rose sharply to 8.1% v/s 4.5% (MoM).  Mining was up 7%, manufacturing rose to 7.9% and electricity was up 10.8%. Primary goods output rose 6% and capital goods increased 16.8%. Intermediate goods was up 1.8% ; infra goods production was up 8.7%, consumer durables was up 17.6% and non-consumer durables grew 7.9%.

CPI or retail inflation came to an 18-month low at 2.33% for Nov v/s 4.88% (YoY). This is for the fourth straight month that retail inflation has been on the decline. This is very much in  line with the RBI stating in the credit policy that going ahead, the weakening of food prices and fall in crude oil prices, indicates that the headline inflation trajectory has a downward bias. Non-food prices are up but food prices showed a de-growth of 2.61% v/s -0.86% (MoM). Cheaper vegetable prices, fruits, pulses and sugar is what is driving down the food prices.

22 out of 23 industries in the manufacturing sector have shown positive growth during the month of October 2018 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of furniture’ has shown the highest positive growth of 41% followed by 39% in ‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ and 30.2% in ‘Manufacture of computer, electronic and optical products’. On the other hand, the industry group ‘Manufacture of paper and paper products’ have shown the highest negative growth of (-) 1.8% followed by (-) 1.7% in ‘Manufacture of beverages’.

The items with high positive growth in production were Soyabean Oil, cut & Polished diamonds, Separators including decanter centrifuge, Readymade Garments, knitted wear and Commercial Vehicles.

Items with high negative growth in production were Electric heaters, API & formulations of hypo-lipidemic agents incl. anti-hyper-triglyceridemics (e.g. simvastatin, atorvastatin, etc); anti-hypertensive, Air filter, Kerosene and ACSR Conductors.

In terms of contributors to high growth in IIP, it was electricity, mining, cement, sunflower oil and two-wheelers while those which dragged down the growth were pig iron, electric heaters, bars &rods of alloy  and stainless steel, copper bars & rods and air filters.

With the results of the Assembly Elections also out, the market will now look for other triggers. Mainly, with the holiday season of Christmas also expected to start, with FIIs and mutual funds typically packing their bags for a week or two, it would be one-day-up-other-day-down kind of market.

With BJP getting some drubbing in these elections, they are expected to get their focus back on “vikas” and other economic parameters as that is what the mandate has dictated.