Welcome, IMA Members!
About usClientsCareersContact us

Home - Knowledge centre
 

Print Back
India Demand Watch - April 2014
07 Apr 2014

Demand: Still no clear signs: Overall GDP growth for April-December 2013 stands at just 4.6%. The government's target of 4.9% for FY14 will require a surge to 5.7% growth in Q4.

  • Industrial GDP continues to contract (de-growing 0.7% in Q3 FY14), even as Services strengthened to 7.6% growth, after four quarters of sub-7% growth. At 0.1%, IIP clawed into positive territory in January, but ‘Year To Date' growth is 0%.
  • At 51.3 in March, the HSBC PMI is in the black for five straight months, but just barely. IMA's BCPI for Q1 FY15 is more positive - interim results suggest a rise to 60 from 53.8 in Q4 of the last fiscal - a sign of hope, or real expansion?
  • Passenger car sales dropped by 1% in February 2014. Cumulatively, they fell 4.8% in April-February FY14. Two-wheeler sales expanded 9.7% YoY in February 2014, though it is early yet to see sustained gains from recent excise duty cuts.
  • FII inflows have surged by USD 12.9 billion between December 2013 and March 2014, taking net FII inflows into sharply positive territory at USD 8.9 billion for the fiscal. At USD 24.4 billion in April-Jan FY14, FDI inflows are also largely stable.
Demand indicators: = demand rising; = demand falling; = demand steady
 
FY12
FY13
FY14 YTD#
Latest quarter#
Latest month#
Trend
Sensex^
-10.5%
8.2%
18.8% (Mar)
9.2% (Dec)
6.0% (Mar)
Net FII inflows (USD bn)^
18.8
31.0
8.9 (Mar)
9.4 (Mar)
5.2 (Mar)
Inbound FDI (USD bn)^
33.0
29.8
24.4 (Jan)
6.0 (Dec)
3.2 (Jan)
IIP
2.9%
1.1%
0.0% (Jan)
-0.9% (Dec)
0.1% (Jan)
IIP - capital goods
-4.0%
-6.0%
-0.8% (Jan)
-0.1% (Dec)
-4.2% (Jan)
IIP - core' sector
5.0%
6.1%
2.9% (Feb)
2.2% (Dec)
4.5% (Feb)
Of which - Cement
6.7%
7.7%
3.3% (Feb)
2.1% (Dec)
2.3% (Feb)
HSBC Purchasing Managers Index
(>50 expansion; <50 contraction)
54.7
52.0
51.3 (Mar)
51.3 (Mar)
51.3 (Mar)
IMA Business Confidence & Performance Index
(>50 expansion; <50 contraction)
51.4
52.6
53.8 (Jan)
53.8 (Jan)
53.8(Jan)
Naukri Job Speak (new job listings) @
7.8%
11.5%
15.2% (Feb)
4.7% (Dec)
2.5% (Feb)
Exports
21.9%
-1.8%
4.3% (Feb)
6.1% (Dec)
-3.7% (Feb)
Imports
32.4%
0.3%
-8.7% (Feb)
-15.5% (Dec)
-17.1% (Feb)
Passenger car and van sales
5.4%
-3.3%
-4.8% (Feb)
-5.1% (Dec)
-1.0% (Feb)
Two wheeler sales
15.7%
2.4%
6.1% (Feb)
9.0% (Dec)
9.7% (Feb)
Non-food credit growth@
16.3%
13.5%
11.3% (Feb)
2.0% (Dec)
14.7% (Feb)
Credit card usage@
27.9%
28.2%
20.6% (Jan)
15.0% (Dec)
24.7% (Jan)

Stress: Moderating inflation caused the RBI to hold interest rates at 8% in its 1st April review; the fiscal deficit remains scary.

  • The WPI stood at a nine-month low of 4.7% in February, driven by food inflation softening to 8.1%; the CPI fell to a 25-month low. Recent unseasonal rainfall has ensured however, that retail inflation (down to 8%) could remain volatile.
  • Aided by strong FII inflows, the INR rose to 60.1/USD in March. On net, though, it has lost 10.5% in 2013-14.
  • After four months of double-digit growth, export growth moderated sharply over November-January, and contracted 3.7% in February. Imports shrank by 17.1% in February - the ninth straight month of de-growth, shrinking the trade deficit, but reflective of a lack of domestic appetite. Government driven control of gold imports is temporary; the trend could reverse.
  • Corporations are fortunately concentrating on improving credit profiles through equity and non-core asset sales - and the use of free operating cash flows created by months of CapEx and expansion freezes. This could aid a stressed banking sector and a return to investment, should the next elections result in a stable government.
Stress indicators: = stress rising; = stress falling; = stress steady
 
FY12
3.5
FY13
FY14 YTD#
Latest quarter#
Latest month#
Trend
Inflation (WPI)
8.9%
7.4%
5.9% (Feb)
7.1% (Dec)
4.7% (Feb)
Base lending rate (Min/Max, %)
10/11.25
9.60/11.25
10.0/11.5 (Mar)
9.95/11.5 (Dec)
10.0/11.5 (Mar)
INR/USD^
-14.6%
-6.3%
-10.5% (Mar)
2.9% (Mar)
3.2% (Mar)
Trade balance USD bn
-183.4
-190.4
-129.4 (Feb)
-30.8 (Dec)
-8.1 (Feb)
Current account USD bn
-78.2
-87.9
-31.1 (Dec)
-4.2 (Dec)
NA
Change in foreign reserves^ USD bn
-14.3
-0.3
7.1 (Feb)
20.7 (Dec)
2.3 (Feb)
Fiscal Deficit INR bn
5160
4899
5993(Feb)
1043 (Dec)
665 (Feb)
Tax revenues
10.5%
17.7%
9.7% (Feb)
10.4% (Dec)
16.0% (Feb)
Sovereign ratings (S&P)
BBB-/Negative
BBB-/Negative
BBB-/Negative
BBB-/Negative
BBB-/Negative
 
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Growth in company net salesĀ  (YoY)
11.5%
8.7%
1.3%
3.5%
0.5%
Growth in PAT (YoY)
31.4%
-9.6%
-11.3%
-23.1%
-3.7%
PAT to Sales
5.7
5.7
5.2
5.1
5.4
Interest Coverage Ratio
2.9
3.3
2.8
2.9
3.0

# Dates in parentheses refer to the month/quarter for which data is reported ^ YoY for FY12 and FY13 and absolute returns/change/amount over the period for fiscal YTD, latest month, and latest quarter; @ YoY change for FY12, FY13 and latest month, and absolute (period) change for fiscal YTD and latest quarter

GDP and sectoral growth: Services picking up again Cumulative export and import growth: Exports: Tremulous
Source: CEIC Source: Ministry of Commerce and Industry
   
Index of Industrial Production: Flat growth Market indices: Trending up
Source: CSO Source: BSE
   

Weighted Call Money Rates: Continued volatility

Yields on GOI securities in the secondary market:
Perceptions of risk continue to prevail
Source: CEIC

Source: CEIC

   
Automobile sales: Less negative, but still contracting Consumer goods IIP growth: Durables under pressure
Source: CEIC Source: CEIC
   
Non-food credit growth: Too dull to push up growth FII inflows and INR/USD exchange rates: Stable
Source: CEIC Source: SEBI, RBI
   
Q4FY14 Business Confidence and Performance
Index (BCPI): 53.8 - Good news on business
performance
Business Confidence and Performance: Higher
Macro-economic expectations may be misled hope,
but sales and new orders appear to be looking up.

Source: IMA India's quarterly BCPI Survey of
January 2014; ~400 respondents

Source: IMA India's quarterly BCPI Survey of
January 2014; ~400 respondents

   
This article is tagged under the following categories:
Subject: @Economy   |  Category: Macroeconomy
Subject: @Economy   |  Category: Trade
Subject: @Economy   |  Category: Markets   |  Subcategory: Capital markets
Subject: @Economy   |  Category: Markets   |  Subcategory: Currency markets
Subject: @Economy   |  Category: Markets   |  Subcategory: Commodities
Subject: @Business   |  Category: Business Trends   |  Subcategory: Consumer markets
Subject: @Business   |  Category: Business Trends   |  Subcategory: Business Confidence
 

This is a free-to-view article. IMA research and analysis is premium content and is available only to members of our Peer Group Forums. These Forums are tailored for specific C-level audiences in an organisation. Membership to these Forums is by invitation only, but if you wish to know more, please write to us.

© Copyright 2017, all rights reserved with International Market Assessment India Private Limited