Industrial production data for April is slated to be released on Friday, which may influence market sentiments in coming days.
Government had said last week it will come out with revised IIP and WPI indices by the end of this year with a new base year of 2011-12 in order to make them more representative of the changing economic scenario.
“IIP is due for revision. It is at a very advanced stage. WPI is also up for revision. Similar to IIP, it is also at the very advanced stage. Both will be revised, as per my expectations, within the current year,” Chief Statistician TCA Anant said.
The Index of Industrial Production (IIP) for March 2016 at 198.2, was 0.1 per cent higher as compared to the level in March 2015.
Religare Institutional Research released its view on what to expect from IIP data:
The sustained weakness in IIP seen in H2FY16 is likely to persist in April, when we expect a 0.5 per cent YoY decline on the back of slower manufacturing and mining activity.
It expects IIP to dip 0.5% YoY in Apr’16 – at odds with the growth in 8-core industries which touched a 17-month high of 8.4% in April. Lower manufacturing and mining activity is expected to pull IIP growth into negative territory.
Manufacturing to lead the decline: The IIP-weighted production of refinery products, fertilisers, steel, cement, CVs, cars, two- & three-wheelers and tractors (together nearly 30% of Mfg IIP) rose by 9% YoY in Apr’16. Based on MoM trends, the remaining part of Mfg IIP has likely fallen sharply, leading to an estimated 2.4% YoY drop in mfg. output in April (continuing the decline seen in four of the previous six months).
Weak coal output to drag down mining: Coal output declined in Apr’16 for the first time in 30 months (by 0.9% YoY), as offtake by power companies has dropped due to higher coal stockpiles. The downtrend in crude oil/natural gas production continued in April, with output down 2.3%/6.8% YoY. These three items account for 80% of India’s mining output; we thus expect output to fall by 0.8% YoY in Apr’16.
Electricity growth to hit 22-month high: Electricity generation is expected to surge by 14.6% YoY in Apr’16 after rising by 11.3% in Mar’16, partly on a low base (Apr’15: -0.5%). As per the Central Electricity Authority, thermal generation (80% of power generated) rose by a sharp 19.8% YoY in Apr’16, led by better PLFs (67.1% vs. 61.7%). Hydro power generation fell by 15.9% YoY, the ninth straight month of decline due to poor monsoons and low reservoir levels.