about 2 years ago
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By Ruma Dubey

IIP for Feb came in at 7.1% v/s 7.5% in Jan and same as in Dec at 7.1%. And retail inflation or CPI for March was at 4.28% v/s 4.4% in Feb. So both were down and both came in much better than expected. This could have a good impact on the markets, depending of course on the numbers of Infosys, which will be the first thing coming in the morning. If the numbers are good and estimates are equally optimistic that will set the mood.

Internals of the CPI (MoM):

Food inflation was lower at 2.8% v/s 3.26%

Pulses and products fell 13.4%  - fifteenth straight month of decline

Fuel and light at 5.7% v/s 6.8%

Housing at 8.3% v/s 8.28%

Clothing and footwear at 4.9% v/s 5%.

What does this mean for the economy? It is apparently manufacturing activity which has kept the IIP at over 7%. What we also noticed was there an increase in credit offtake too but this could be temporary as post the PNB debacle, the collateral damage would leave a telling effect in the months to come.

Also on the inflation front, today’s data looks good but it does not look as though this trend will continue for too long. Fuel prices are soaring as with peak summer on the heads, vegetable and fruit prices are sure to surge.

In terms of industries, fifteen out of the twenty three industry groups in the manufacturing sector have shown positive growth during the month of February 2018 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of other transport equipment’ has shown the highest positive growth of 32.0 percent followed by 26.9 percent in ‘Manufacture of machinery and equipment n.e.c.’ and 19.9 percent in ‘Manufacture of motor vehicles, trailers and semi-trailers’. On the other hand, the industry group ‘Other manufacturing’ has shown the highest negative growth of (-) 27.3 percent followed by (-) 9.4 percent in ‘Printing and reproduction of recorded media’ and (-) 8.2 percent in ‘Manufacture of rubber and plastics products’.

Some important item groups showing high positive growth during the current month over the same month in previous year include ‘Separators including decanter centrifuge’ (214.4%), ‘Stainless steel utensils’ (158.3%), ‘Bodies of trucks, lorries and trailers’ (149.2%), ‘Ship building and parts thereof’ (107.8%), ‘Sugar’ (60.1%), ‘Bars and Rods of Alloy and Stainless Steel’ (58.1%), ‘Vaccine for veterinary medicine’ (51.4%), ‘Steroids and hormonal preparations (including anti-fungal preparations)’ (41.3%), ‘Axle’ (40.2%), ‘Commercial Vehicles’ (30.6%), ‘Two-wheelers (motorcycles/ scooters)’ (29.6%), ‘Industrial Valves of different types- safety, relief and control valves(non-electronic, non-electrical)’ (27.7%) and ‘Cement- all types’ (23.8%).

Some important item groups that have registered high negative growth include ‘Hand Tools incl. interchangeable tools, not mechanised’ [(-) 68.0%], ‘Jewellery of gold (studded with stones or not)’ [(-) 66.9%], ‘Material handling, lifting and hoisting equipment’ [(-) 46.6%], ‘Paper of all kinds excluding newsprint’ [(-) 34.5%], ‘Bags/ pouches of HDPE/ LDPE (plastic)’ [(-) 33.0%], ‘Plastic components of packing/ closing/ bottling articles & of electrical fittings’ [(-) 30.9%], ‘Medical/ surgical accessories’ [(-) 27.4%], ‘Telephones and mobile instruments’ [(-) 23.8%], ‘Agarbatti’ [(-) 23.1%], ‘Anti-pyretic, analgesic/anti-inflammatory API & formulations’ [(-)23.1%], ‘Generators/ Alternators’ [(-) 22.6%] and ‘Other tobacco products’ [(-) 22.3%].

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