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October IIP a blip

Posted by fairval on December 18, 2006

Most analysts have disregarded IIP data for Oct’06 as a blip, a one-off low number. They expect November data to come back to the 10% or so range of growth. I agree. I would also go so far as to say that the 6.2% shown in Oct is perhaps an error. Says an I-Sec report – With almost all indicators witnessing strong trends (leading to the RBI raising CRR by 50bps after a gap of two years), weak industrial data has been puzzling’.

More from the report – ‘It is difficult to provide a rationale for the sharp drop in consumer goods, except considering it as a one off. Routine explanations are not convincing – holidays due to major festivals in October could be one reason for lower production although it is inexplicable why it would impact just one segment of the industry (consumer goods)’.


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