The IIP data for September was released today. Index of Industrial Production for September grew by 4.8% compared to 1.3% in the previous month but lower than 6.98% on a YoY. Manufacturing which accounts for two-thirds of the IIP rose 4.8% against 7.45% on a YoY. Capital goods were up 18.8% as against 20.9% growth last year. Mining was up at 5.7% as against 4.9% on a YoY. Consumer durables production reported a robust growth at 13.1% as against a fall of 7.3% last year.The August Industrial Production figure has been revised marginally upwards at 1.4% from 1.3% in August. Albeit marginal, it’s at least upwards.
After all this number crunching, what is the emerging writing on the wall? Undoubtedly, the growth rates still show signs of pain and it would take a while to get out of the woods. Due to the oncoming festival season, industries usually stock up inventories and hence the figures in September were more or less on the expected lines. In October too, nothing untoward or a negative growth is expected, it would be more or less flat.
But November would be a different story and that too a painful story. With many companies cutting down on production and shutting down factories to cut down on the piled up inventory to lack of demand, November IIP figures would be tough. In the entire second half of the current fiscal, IIP is expected to show an average growth at 2.5-3%.
This resulted in a short-lived spike in the market followed by a sharp sell-off. Bombay Stock Exchange’s Sensex closed at 9,536.33, down 303.36 points or 3.08 per cent. The index touched an intra-day low of 9376.73 and low of 9376.73.
National Stock Exchange’s Nifty broke the support of 2800 and touched an intra-day low of 2794.95 before closing 3.07 per cent lower at 2848.45.