The yearly SBI Composite Index for September 2015 is at a four month high at 53.9 (moderate growth), compared to last month index of 53.4 (moderate growth). However, the Monthly Index declined to 48.4 (Low Decline) in Sep’15, from 53.1 (moderate growth) in Aug’15.
The upturn has been majorly driven by manufacturing, while mining and electricity are still acting as a drag on economic activity. We expect, September IIP may be the highest since Nov’14, when it expanded at more than 5%.
Credit growth is seen in some industries like drug & pharmaceuticals, petro chemicals, basic metals, iron and steel and power sector.
Views on the road sector are positive, that is employment intensive. Going forward, government plans to develop a total of 66,117 km of roads under different programmes such as national highways development project (NHDP), special accelerated road development programme in North East (SARDP-NE) and left wing extremism (LWE), and has set an objective of building 30 km of road a day from 2016. These changes are positive but one can expect impetus in the road sector to come in next 18 months or so.
The Index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. Index above 50 implies growth over previous respective period and less than 50 will suggest a contraction over respective period.