Higher commodity prices in the context of the emerging geo-political risks remain a point of concern - Acuité Ratings

Mr Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, comments on Core Sector Jan-22

"The growth in the core sector has marginally eased to 3.7% YoY in Jan-22 as compared to the revised print of 4.0% YoY in Dec-21; but it has grown moderately by 2.0% in a sequential manner. Except for natural gas and fertilisers, the other six core sectors have shown a sequential growth which is, however, lower than the sequential growth seen in Dec-21. While the core sector has been largely resilient to the third wave of the pandemic witnessed in the month of Jan-22, the weaker momentum in output growth can be attributed to the uncertainty created by the spread of Omicron.

Coal and cement are the two sectors which have shown significant uptick in output in Jan-22. Coal production has seen a production growth of 8.2% YoY and 6.4% MoM, reflecting the efforts made by Coal India to catch up with the production targets of FY22. The cement sector has continued with the momentum output has grown further in Jan-22 with a YoY print of 13.7% which is a monthly record and reflects a pickup in construction activities. While we continue to believe that government's thrust on infrastructure segment and the progress in vaccinations will strengthen core sector activity over the next few quarters, higher commodity prices and fresh supply chain bottlenecks in the context of the emerging geo-political risks through the Russia-Ukraine conflict will remain a point of concern."

Source : Equity Bulls

Keywords

AcuiteRatings CoreSector CommodityPrices GeoPoliticalRisks