A CNBC-TV18 poll of analysts had estimated it November CPI at 4.4 percent against 5.52 and October IIP at 2.1 percent against 2.5 percent on a month-on-month basis.
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The index for industrial output (IIP) for the month of October slipped to a three-year low of -4.2 percent against a CNBC-TV18 poll estimate of 2.1 percent, led by a degrowth in manufacturing sector, which stood at -7.6 percent as against 2.5 percent (MoM). The September IIP had come in at 2.5 percent.
The growth in intermediate goods contracted 3.1 percent against a growth of 1.8 percent and capital goods shrunk at -2.3 percent against 11.6 percent, while electricity sector grew at 13.3 percent as against 3.9 percent on a month-on-month basis. Even mining sector sttod at 5.2 percent as against 0.7 percent M-o-M.
Inflation based on consumer price index (CPI) further cooled to 4.3 percent in November as against 5.52 percent in October led by favourable base. A CNBC-TV18 poll of analysts had estimated it at 4.4 percent.
According to estimates, the biggest decline has been led by food, beverage and tobacco inflation, which constitute 50 percent of CPI. The food inflation fell to 3.1 percent against 5.59 percent on a month-on-month basis. The data for rural inflation came in at 4.09 percent against 5.52 percent and that for urban inflation stood at 4.69 percent versus 5.55 percent M-o-M.
Reacting to the numbers, Rupa Rege Nitsure, Chief Economist & GM, Bank of Baroda , said though the data for October is due for correction, it is true that industrial production is not looking very encouraging, nor has credit taken off. Hence, she does not expect any rate cut, “definitely not on account of lower food inflation because it is seasonal in nature”.
Sandip Sabharwal, Independent Market Expert, says: “The IIP data has come in at a time when global market is very volatile. The slowdown is a reality, and corrective mood in the market will continue.”
He too feels the RBI communication is very clear – that the central bank will not cut rates till February. He expects market to sink a little more.