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25
January 2018
 |
SBI (The Total Investment & Insurance Solutions)
“We
believe the economy is now in a gradual recovery mode. The 8.4% IIP growth in
November is possibly no flash in the pan and a 6% + growth in December as per
SBI Index may not be ruled out. In January 2018, the IIP may continue to grow
in excess of 4%, indicating a marginal moderation in month-on-month growth,”
says a report from the Economic Research Department (ERD) in SBI Corporate
Centre.The Total Investment & Insurance Solutions
ERD
aims at tendering technical advice to the management on economic and financial
problems in which the bank has interest and which requires expert analysis. The
report has been authored by Dr. Soumya Kanti Ghosh, Group Chief Economic
Adviser, SBI. The yearly SBI Composite Index for Jan’18 is at 52.1 (Moderate
Growth), compared to 53.1 (Moderate Growth) in Dec’17. The M-o-M index declined
to the benchmark of 50 and is at 49.5 (Low Decline) in Jan’18, compared to 50.6
(Low Growth) in Dec’17.
The
report points out that improved credit ratio (upgrades to downgrades) during
the 9-month ending Dec’17 favoured NBFCs, especially housing finance companies
with credit ratios of 3, i.e. nine companies upgraded during the period as
compared to downgrade of 3 companies. “This indicates that household
consumption growth remains robust and will only improve in the coming days,”
says the report. The Total Investment & Insurance
Solutions
In the
infra sector, power producer and electric utility companies have also shown
improved credit ratio of 1.35 and 1.88 during the period. In the consumption
space chemicals, auto components, container and packaging etc. have shown
credit ratios of above one between Apirl’17 and Dec’17 as per the data of
all rating agencies. Improved credit ratio indicates that household consumption
growth remains robust and will only improve in the coming days.
According
to the study, a synchronized global growth with an uptick in the commodity
cycle will also help sectors like metals, textiles and even sugar. For example,
credit growth in textiles, traditionally an employment intensive sector, has
dipped into negative territory since the sector earned a bad name due to
defaults. However, going by FY17 IPO mop up of more than Rs800 crore, the study
expects textiles to do well in the coming fiscal.The Total Investment & Insurance Solutions
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