Contact Your Financial Adviser Money Making MC
26
December 2016
 |
SBI Index (The Total Investment & Insurance
Solutions)
The yearly State Bank of India (SBI)
Composite Index, an indicator for tracking India’s manufacturing activity, has
crashed to an all-time low in December 2016 of 45.5 (moderate decline),
compared to last month’s revised index of 50 (low growth). According to the
researchers at SBI, the Index of Industrial Production (IIP) may show a decline
in December 2016. The Total Investment
& Insurance Solutions
"Retail sales during the month of
November 2016 were down in the range of 20-40% due to currency crunch and
negative sentiments on account of uncertainty post Government’s monetary
initiative. Even the festive season shifted early by almost a month this time,
which also resulted in lower sales during November due to post-festive
sluggishness. Overall we feel that the effect of demonetisation is more of
short term nature, say a quarter or two in most of the sectors, except real
estate, jewellery, and luxury goods, and will normalise thereafter," SBI
says in a report. The Total Investment
& Insurance Solutions
 |
SBI Index 14(The Total Investment & Insurance
Solutions)
Interestingly, the directional validation of
the SBI composite index also throws some more interesting facts on
manufacturing activity. The directional validation indicates the direction of
the predicted month-on-month index with the actual IIP-Manufacturing index
growth for the corresponding month.
 |
SBI Index2 (The Total Investment & Insurance
Solutions)
Sectors such as fast-moving consumer goods (FMCG),
consumer durables, plantation and plantation products, and fertilizers, which
mostly derive strength from rural influence, will seem to face certain
moderation in demand from the consumer side, owing to significant amount of
cash transaction involved in these sectors. The Total Investment & Insurance Solutions
"We may see weak Q3 sales for India
Incorporation as most of the sectors that do cash sales - are either extending
credit or are not doing sales. The weak sales would have a trickle-down impact
on the supply chain, thus hampering economic activity across sectors and supply
chain," the report from SBI says.
 |
SBI Index3 (The Total Investment & Insurance
Solutions)
The report also highlights low credit growth,
which it feels is a matter of concern. The fortnightly data of all scheduled
commercial banks (ASCB) indicates that credit off-take (year-on-year) continues
to be a laggard and has declined to a historical low of 5.8% as on 9 December
2016.
 |
SBI Index4 (The Total Investment & Insurance
Solutions)
"Due to weak credit off-take and huge
money inflows, we expect a faster rate of marginal cost of funds-based lending
rate (MCLR) transmission by banks in the coming days as inflation trajectory is
expected to remain benign with consumer price index (CPI) inflation at sub-4%
for coming months till January 2017. Though inflation may increase thereafter
(post January), it may not be more than 4.5% by March 2017," SBI
concluded.The Total Investment &
Insurance Solutions
No comments:
Post a Comment