RADHIKA RAO

ECONOMIST, FORECAST, SINGAPORE

Base effects however mask the slowdown in activity on sequential basis as higher borrowing costs and increase in fuel/raw material prices impinge on activity. Month ahead could see modest boost from festive demand, which will however fade into late Q4 and ease well into next year. Friday’s WPI number will be the main determinant of policy action as RBI remains tolerant to signs of slowdown in consumption and production indicators. We see a lean towards a rate hike in October, likely the last for this fiscal year.

KUMAR RACHAPUDI

FIXED INCOME STRATEGIST, BARCLAYS CAPITAL, SINGAPORE

The IIP number is slightly below expectations but what matters for RBI is the inflation. RBI’s statements have been hawkish and clearly hinting that inflation is still the priority. Base case has been for no hike on October 25, but the probability of hiking has increased a lot.

RUPA REGE NITSURE

CHIEF ECONOMIST, BANK OF BARODA, MUMBAI

This is not a very good number and majority of the contribution has come from the statistical base effect. Last year i.e. August 2010, the IIP figure was relatively low. Sequentially, it shows the same trend of industrial slowdown. I do not see much room for further rate hikes. I feel interest rates may remain flat till we see signs of inflation coming down but till then RBI will have to concentrate more on sector specific administrative measures than board-based rate hikes. Though stance of the policy will remain hawkish and they should not reduce interest rates but further hikes I am ruling out as another 25 bps hike will not make a material impact as banks are not seeing any scope for further transmission. Credit growth and capex is slowing, so I do not expect any rate increases.

ANUBHUTI SAHAY

ECONOMIST, STANDARD CHARTERED BANK, MUMBAI

The IIP print underlines the weakness in the industrial sector. With demand expected to moderate further and continuance of policy paralysis (mining has contracted only thrice since the beginning of the new IIP series out of which two has happened in this FY itself), IIP is unlikely to bring any good news for the next few months. However, with the focus still on inflation, we expect the RBI to hike rates, for the last time, by 25 bps in its October 25 policy meeting before it hits on the pause button.

INDRANIL PAN

CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

The IIP number is worse than our expectations of 4.5%. The policy dilemma is rising as the inflation is not cooling, and currency has depreciated which will have an inflationary bias, but the growth bit is now showing a weakening bias.

SHAKTI SATAPATHY

FIXED INCOME STRATEGIST, AK CAPITAL, MUMBAI

The numbers across sub indices signal slowdown in the economy. Moreover, the growth in intermediate goods on year-to-date basis is disappointing and indicates production activities are taking a setback. Further slow growth in consumer durables reflects demand moderation in the economy resulting from the effective policy transmission. With sluggish growth and unrelenting inflation level, the task for RBI in the forthcoming policy meet will remain challenging.

ASHUTOSH DATAR

ECONOMIST, IIFL, MUMBAI

We continue to expect a pause on policy rates from RBI on October 25. But things have been complicated by rupee’s depreciation and resurgence in commodity prices. The inflation number due on Friday is still crucial because if a deceleration is seen in the sequential core inflation number, RBI will have more ammunition to advocate a pause.