November 30, 2009
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Monthly economy review
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Economy: Indian economy displays healthy growth in
second quarter
India’s gross domestic product (GDP) growth for
Q2FY2010 came in at 7.9% year on year (yoy), well
above the consensus estimate of 6.3% as well as the
GDP growth of 6.1% yoy for the previous quarter. The
sturdy growth seen in Q2FY2010 was fuelled by a strong
growth momentum in the community, mining and
manufacturing segments, which grew by 12.7%, 9.5%
and 9.2% yoy respectively. The surge in the GDP growth
rate followed by a steady rise in inflation will reiterate
the government’s stance of phasing out the stimulus
measures announced earlier.
India’s trade deficit in September 2009 came in at $7.8
billion, declining both on a year-on-year (y-o-y) as well
as a sequential basis. On a y-o-y basis, the trade deficit
fell by a sharp 49.4% whereas the sequential decline
stood at 7.2%. Notably, the exports for the month
contracted at a much slower pace, as the same dipped
by 13.8% yoy, lower compared with the 19.4% decline
seen in the previous month. Meanwhile, the imports
contracted at a faster pace than exports registering a
decline of 31.3%.
The Index of Industrial Production (IIP) for September
2009 registered a stellar growth of 9.1% yoy, far
outperforming the estimate of 7% yoy. On a sequential
basis, however, the IIP witnessed a decline from the
11% y-o-y growth seen in the previous month. This was
on account of a dip in the core sector’s growth. The
core sector’s growth accounts for ~27% of the IIP. From
a use-based perspective, the growth in the capital
goods segment continued its upward trend, registering
a stellar growth of 12.8% vs the 8.7% rise seen during
August 2009. The growth in consumer goods stood
strong at 8.2% vs the 7.4% growth seen during the
previous year, led by a stellar 22.2% y-o-y growth in
the consumer durables segment, which made up for
the muted gr