Its politics and only politics which seems to have a firm grip on the market sentiments. At this point of time, nothing else matters. The lacklustre market is not really looking for any triggers at this juncture as it knows, nothing will work. Hence the IIP data which came in today was a virtual non-event. It was like “ho-hum” another data coming in; that’s about the only reaction evinced by the market.
March IIP was at -2.3% as against -1.2% in Feb 09’. For FY09, IIP was pitiably down at 2.4% v/s 8.5% in FY08.
The main growth was seen in electricity and consumer durables. Electricity output was up at 6.3%. This could probably be due to the onset of summer, increasing demand for electricity. Consumer good was down 0.8% but of this, consumer durables showed a very healthy growth of 8.3% while non consumer durable was down 3.6%. This also clearly means, people were buying more white goods during March, probably taking advantage of the various sales and discounts announced on account of the end of the fiscal. Consumer durable also includes automobiles and the rise in sales of cars is what was also reflected.
Manufacturing output for March was down 3.3% and that is also one cause for worry. Pile up of inventory and demand not really picking up in all the sectors keepT this figure down. Capital goods showed a contraction of 8.2%, which is also in concurrence with the falling manufacturing output.
The general view amongst the analysts is that this is probably the last of the worst. From April onwards, we should see an improvement as inventory is now under control. Govt spending has also been stepped up and hence all this could help prop up the numbers in the months to come.
All said and done, there is no denying that the market simply did not care today about this IIP data. It came and went. The market is very focussed. It has eyes rooted only on the political arena. A coalition is a certainty but what is uncertain is the hotchpotch Govt which would eventually emerge and that is giving the market the jitters. Exit Poll results will start coming in from tomorrow evening. So till the new Govt takes shape, and the market is convinced about the stability and composition of the Govt, IIP or inflation, nothing will really matter.
Complied from www.sptulsian.com