The growth of eight key infrastructure sectors slowed down to a 4-month low of 8.1 per cent in September 2023 against 8.3 per cent a year ago, according to the official data released on Tuesday. The growth rate in the output of refinery products, fertiliser, cement and electricity during the month under review has decelerated, while it was negative in the case of crude oil. The previous low was in May, when the growth rate of these sectors stood at 5.2 per cent.
Industrial production growth rate has declined to 7.6%, due to dismal performance by manufacturing, mining and electricity sectors.
"The Index of Industrial Production (IIP) is expected to remain subdued and register below 5 per cent growth during the remaining months of FY'12 as production activity continues to be impacted by the slowdown in investment demand and the weak business and consumer sentiment," D&B said in the latest issue of its 'Economic Observer' report.
Brokerages expect a further slowdown in Indian firms' revenue and earnings growth in Q4FY25, following low single-digit growth in the preceding three quarters, as factors like weak consumer demand and credit growth linger on.
Led by a strong performance from the manufacturing sector, industrial growth shot up to 8 per cent during January 2005 while posting a higher 8.4 per cent growth in the April-January period this fiscal.
India's factory output maintained its robust pace in March, growing by 13.5 per cent despite monetary tightening and a partial roll back of stimulus measures. Driven largely by manufacturing, this was the sixth straight month of double-digit expansion.
Output of consumer durables fell to 3.1 per cent in the first month of this calendar year, against 5.3 per cent growth in the same month last year. In the April-January period production declined to 1.7 per cent, against 10.6 per cent growth in the same period last fiscal. Growth in manufacturing output, which has an overwhelming weight in the IIP, slipped to 5.9 per cent in January, against 12.3 per cent, electricity generation fell to 3.3 per cent, against 8.3 per cent.
While the capital spending is being maintained at 3.1 per cent of the GDP, a little more would have boosted economic growth even further, suggests Rajiv Memani.
There was more good news for the government on the economic front with the industry recording a 6.5 per cent growth for the first 10 months of the current financial year as against 5.7 per cent during the same period of last fiscal.
Overall, volume growth is likely to be in the range of 3-8 per cent for two-wheelers and 5-7 per cent for passenger vehicles owing to healthy demand from urban and rural areas and pending order books.
Slowdown in industrial production notwithstanding, a marginal increase in inflation raised the clamour for another round of rate cut by the Reserve Bank on April 4 to boost economic activity.
Rising interest cost led to drastic deceleration in manufacturing growth to 3.9 per cent in May, compared to 11.3 per cent in a year-ago period. Manufacturing has a weight of over 79 per cent in IIP.
Negative growth in mining and electricity pulled down the industrial growth to 4.9 per cent in February this year, nearly half of 8.3 per cent growth recorded in the same month previous year.
The RBI interest rate decision, industrial production data for June and the ongoing quarterly earnings from corporates would largely drive the stock markets this week, analysts said. Other major factors such as global market trends, the movement of oil prices and the trading activity of foreign investors would also influence trading, they added. "The market will have an eye on the RBI Monetary Policy Committee (MPC) meeting, which will be announced on August 10, 2023. We are heading towards the last batch of Q2 earnings of key companies such as Adani Ports, Coal India, Hero MotoCorp, Hindalco and ONGC, among others, which will lead to stock-specific movement," said Pravesh Gour, senior technical analyst, Swastika Investmart Ltd.
Industrial growth in the country revived moderately to 8.8 per cent in June this year on the back of a smart recovery in the manufacturing sector and better offtake of capital goods.
India needs to revive corporate sector investment, push critical reforms and remove infrastructural bottlenecks to boost industrial growth in the country, says a government document.
The manufacturing sector, which accounts for over 75 per cent of the total weight of the index, grew by just 5.6 per cent in May.
From the 30-share pack, Hindustan Unilever, Tata Motors, Axis Bank, Nestle India, Asian Paints, ITC, Reliance Industries, Mahindra & Mahindra, IndusInd Bank and State Bank of India were among the laggards. Larsen & Toubro, Tata Steel, JSW Steel, HDFC Bank, Adani Ports, Kotak Mahindra Bank, Bharti Airtel and PowerGrid were among the gainers.
Aided by a high growth in the manufacturing sector, the industrial growth in the country touched 6.3 per cent during April-December 2003 as against 5.5 per cent during the corresponding period of 2002.
The stocks are largely from sectors such as chemicals, finance and cement, which struggled earlier but the worse seems to be behind them.
The growth of eight key infrastructure sectors slowed down to 4.3 per cent in May 2023 due to a decline in the production of crude oil, natural gas and electricity, according to the data released by the government on Friday. The core sector growth was 19.3 per cent in May 2022, while in April 2023, the key infra sectors recorded a growth rate of 4.3 per cent. During April-May this fiscal, the output growth of these eight sectors slowed down to 4.3 per cent against 14.3 per cent in the year-ago period, the data showed.
Snapping an eight-month trend of double-digit rise, industrial growth slid to 7.1 per cent in June from 8.3 per cent a month ago.
The wholesale price inflation rose to 1.84 per cent in September as food items, especially vegetables, turned costlier, as per the government data released on Monday. The wholesale price index (WPI)-based inflation was 1.31 per cent in August. It was (-)0.07 per cent in September last year.
Powered by the high growth of the manufacturing sector, industrial growth touched 7.6 per cent during the first quarter of the current financial year as against 5.7 per cent during April-June, 2003.
Starting the new financial year on a positive note, the industrial growth more than doubled to 9.4 per cent in April 2004.
Led by a strong performance from the manufacturing sector, industrial growth shot up to 8.4 per cent during April-December this fiscal.
The record contraction in the growth rate of eight core sectors will have its impact on IIP.
Led by strong recovery in the manufacturing sector, industry grew at 7.9 per cent in the first six months of the current fiscal compared to 6.2 per cent in the same period last year.
Geopolitical events, macroeconomic data and quarterly earnings of corporates would guide the stock market in a holiday-shortened week ahead, analysts said. Stock markets will remain closed on Wednesday for Ram Navami. "This week promises to be crucial for the market as fresh worries about a potential conflict between Iran and Israel emerge.
With the manufacturing sector gearing up, India's industrial growth improved to 5 per cent in the first two months of this year as against 4.1 per cent in the previous year, despite mining and electricity sectors performing poorly.\n\n\n\n
Gujarat, for the second consecutive year, has topped the Niti Aayog's Export Preparedness Index 2021 which is aimed at assessing the readiness of the states in terms of their export potential and performance. Gujarat was followed by Maharashtra, Karnataka, Tamil Nadu, Haryana, Uttar Pradesh, Madhya Pradesh, Punjab, Andhra Pradesh and Telengana, according to the government think tank's report. Union territories and states like Lakshadweep, Arunachal Pradesh, Mizoram, Ladakh and Meghalaya were placed at the bottom.
'There's a misconception that all Rs 1 lakh crore will be spent immediately, leading to higher consumption of FMCG goods, travel, and vehicle purchases.' 'While some of this money will go toward consumption, not all of it will.' 'The impact depends on where people deploy their savings.'
Global trends, macroeconomic data announcements and the start of the earnings season would be the major drivers for the equity markets in a holiday-shortened week, analysts said. Equity markets will remain closed on Thursday for Eid-Ul-Fitr. Trading activity of foreign investors, rupee-dollar trends and crude oil prices would also guide trends in markets.
Indian industry has logged a growth of 9.5 per cent in April 2006 as against 8.1 per cent in the same month last fiscal.
Industrial production in May slowed to 2.7 per cent from 5.6 per cent a year ago, dragged down by manufacturing, strengthening the case for an RBI rate cut.
A sharp slowdown in mining sector lowered industrial growth to 7.4 per cent during August 2005 as against 8.6 per cent in the same month last fiscal.
The sharp rise was also due to a statistical illusion -- low industrial numbers in November 2015, and sharp reversal of a 12-month declining trend in capital goods.
The Institute of Economic Growth also expected banks prime lending rates to decline to below 11 per cent in next few months which would further spur industry growth.
In previews of Q2FY25 and beyond, industry analysts are expecting a turnaround for IT services. High teens earnings per share or EPS growth is expected for the next two-three financial years. The hopes are backed by deal wins of above $100 billion as at Q1FY25, up 16.6 per cent year-on-year ( Y-o-Y).
Wholesale inflation fell to a 3-month low of 2.04 per cent in July on decline in prices of food items especially vegetables, government data released on Wednesday showed. The decline in wholesale price index (WPI) based inflation in July came after it rose for four months in a row till June, when it was 3.36 per cent. It was (-) 1.23 per cent in July last year. In April wholesale inflation stood at 1.19 per cent.
