The Industrial Production Index (IP) rose by 15.1% yoy in February compared to 16.7% yoy growth in January. This was lower than the consensus, and our expectation of 16% yoy growth. Sequentially, IP fell 0.4% mom; seasonally adjusted, giving off gains from three consecutive expansionary months. In quarter-on-quarter terms, however, IP was up 5% in February, similar to January.
Consumer goods gained while capital goods came in weaker after huge gains in previous months. On a sequential basis, both consumer durables (2.2% mom in February vs. -2.8% mom in January) and consumer nondurables (0.9% mom in February vs. -5.1% mom in January) ticked up. The Capital Goods Index fell 4.3% mom. [So are the Capital Goods Stock Quoting at Expensive Valuatiosn to the Growth the Overall Sector is Offering ?]
Although weaker than expected, industrial activity remains robust, allowing the Reserve Bank of India (RBI) to tighten policy. A host of economic indicators reiterate the robustness of underlying activity—the March PMI Index was an expansionary 57.8, and motor vehicle sales grew 37.6% yoy in March.
