India IIP for July'20 - Angel Broking

Mr. Jyoti Roy - DVP - Equity Strategist, Angel Broking Ltd

"India IIP for the month of July contracted by 10.4% YoY as compared to a contraction of 15.7% in June while IIP for the first five months of FY2021 has contracted by 29.2% YoY. The contraction for the month of July was largely along expected lines given that localized lockdowns had disrupted production and supply chains during the month of July. The mining and manufacturing sectors witnessed contraction of 13.0% and 11.1% YoY while electricity contracted by 2.5% YoY. However we expect IIP to improve sequentially from here on given pent up demand, inventory push prior to the festive season and further opening up of the economy under unlock 4.0. The recovery is reflected in high frequency data like Auto sales and PMI numbers for the month of August. Auto companies reported another month of strong sequential growth with Maruti Suzuki reporting a 17.1% yoy increase in August domestic sales as compared to a 1.1% growth in July while Hero Motocorp reported a 6.5% yoy growth in motorcycle sales. The manufacturing PMI for August also pointed to continued improvement as it improved to 52.0 from 46.0 in July."

Source : Equity Bulls

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