Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on IIP data

"The IIP print for Nov 2020 has been disappointing with a YoY contraction of 1.9% as against a growth of 3.6% witnessed in Oct 2020. The data reflects the uneven trajectory of the ongoing industrial recovery, the continuing uncertainty on a broad based demand revival beyond the pent up levels and also the slowdown in the export momentum over the last 1-2 months. While mining activities continue to pick up on a sequential basis, the output levels are still lower than that in last year. While power generation recorded a 3.5% growth over Nov 2019, it has dropped appreciably over the previous month even factoring in the lower household demand arising from the seasonal factor. Although some key segments in the manufacturing sector such as basic metals, automotive, capital goods, pharma and chemicals continue to show a gradual pick up, the extent of the YoY growth is very modest. The persisting weakness in segments such as oil refining, textiles, apparels and paper continue to thwart a broader industrial recovery. Further, both consumer durables and non-durables production have seen a stagnation vis-à-vis last year, highlighting the uncertainty on consumer demand beyond the festive months. Given the lack of consistency in the IIP print, any meaningful GDP growth may be unlikely in Q3 FY21."

Source : Equity Bulls

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