Jan 14, 2005|
IIP: Sending the right signals...
Over the last few days, the Indian indices have witnessed strong selling pressure, resulting in the benchmark index (the BSE-Sensex losing nearly 9% from its all time high of 6,679 points recorded on Jan 3, 2005. This fall was attributed to profit booking on account of a 'healthy' correction and also to the vibes from the US Federal Reserve on the interest rate scenario. One of the major triggers to the downfall was the release of the minutes of the Fed meet in December, which mentioned that interest rates in the US are likely to rise at a faster rate.
However, soothing statements by the Finance Minister and the scrapping of the controversial Press Note 18 brought back the investors to the markets, which saw the indices closing strongly in yesterday's trades. Also aiding the sentiment was the economic performance as indicated by the IIP (Index of Industrial Production) figures released for the period of April-November 2004. Let us take a look at some important points of the same.
The official IIP registered a growth of 7.9% in November as compared to 8.2% during the corresponding period last fiscal. For the eight-month period, April-November, the growth figures look more attractive with 8.4% YoY growth as compared to 6.4% during the same period last fiscal.
A major contributor to this growth was the manufacturing sector, which witnessed YoY growth of 8.9% during the first eight months of the current fiscal as against 7.1% during the corresponding period last fiscal. The index of capital goods has jumped by 13.5% during the said period as against 9.7% during the corresponding period last fiscal.
The consumer durables segment also grew at a healthy 15.8% during the first eight months of the current fiscal as compared to 8.7% growth witnessed during the same period previous fiscal. Higher income resulted in higher purchasing power, which led to this growth.
The below mentioned table gives a quick glance of the growth witnessed by the major sectors of the IIP.
One major factor that draws the attention is the growth of 13.5% in the capital goods segment. This comes on the back of improved economic performance on the macro level and stronger balance sheet of India Inc. To put things in perspective, global economy witnessed a sort of recovery led by a hike in commodity prices during the last year. All this while, the Indian industry had not witnessed any significant capacity expansion and addition, resulting in the narrowing of the demand and supply gap. However, in order to address the rising demand, huge capex plans have been lined up, thereby resulting in higher non-food credit offtake for the banking sector.
This should, under normal circumstances, augur well for the banking sector as well. However, competitive pressures have resulted in an insignificant rise in interest rates. Further, the government has shown its intent to speed up the construction and infrastructure activities, which would help the economy in the long run. All in all, the economy is on a right path to growth in the current fiscal and the long-term signals seem to be positive for the investors.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407