Key Takeaways - IIP Feb 2013- 12-04-2013

Index of Industrial Production (IIP) has grown at 0.6% for Feburary 2013 (above market expectations of ~-1.3%) compared to 2.4% in January 2013 (MoM) and 4.3% in February 2012 (YoY). The cumulative growth for the period April-Jan 2012-13 stood at 0.9% vs. 3.5% over the corresponding period of the previous year.

Outlook – IIP headline data for February came above street expectations. The growth in IIP was mainly on the back of some growth in manufacturing sector (capital goods grew 9.5%). Mining sector was a big negative this month (-8.1%). However capital goods numbers on a standalone basis cannot be construed as conclusive for the turnaround, as these will see sustained pick up only with pick up in projects.

Market valuations have again become attractive post correction. We recommend investors to accumulate quality blue chip stocks with medium to long term perspective and focus on reform led sectors like oil and gas. IT, Pharma and FMCG could be bought on correction.

Sector-wise growth indicator

· Manufacture sector growth at 2.2% vs. 4.1% (YoY)

· Mining sector growth at -8.1% vs. 2.3% (YoY)

· Capital sector goods growth at 9.5% vs. 10.5% (YoY)

· Electricity sector growth at -3.2% vs. 8.0% (YoY)

· Basic goods growth at -1.8% vs. 7.6% (YoY)

· Intermediate goods growth at -0.7% vs. 1.0% (YoY)

· Consumer durables goods growth at -2.7% vs. -6.2% (YoY)

· Consumer non durables goods growth at 2.9% vs. 4.4% (YoY)