Key Takeaways - IIP Jan 2013

Index of Industrial Production (IIP) has grown at 2.4% for January 2013 (above market expectations of ~1.3%) compared to -0.5% in December 2012 (MoM) [revised upwards from -0.6%] and 1.0% in January 2012 (YoY). The cumulative growth for the period April-Jan 2012-13 stood at 1.0% vs. 3.4% over the corresponding period of the previous year.

Outlook – IIP headline data for January came above street expectations. The growth in IIP was mainly on the back of strong growth in manufacturing, electricity sector & consumer non durables. On the other hand, mining & capital goods continue to show signs of slowdown

Going forward, investors will keep an eye on the monetary policy action to be taken by RBI on 19^th Mar13. We recommend investors to accumulate quality blue chip stocks with medium to long term perspective, as India continues to remain an attractive equity investment destination. We recommend investors to focus on rate-sensitive sectors like banking, auto etc. and on quality stocks in reform led sectors like oil and gas sector and media.

Sector-wise growth indicator

· Manufacture sector growth at 2.7% vs. 1.1% (YoY)

· Mining sector growth at -2.9% vs. -2.1% (YoY)

· Capital sector goods growth at -1.8% vs. -2.7% (YoY)

· Electricity sector growth at 6.4% vs. 3.2% (YoY)

· Basic goods growth at 3.4% vs. 1.9% (YoY)

· Intermediate goods growth at 2.0% vs. -2.5% (YoY)

· Consumer durables goods growth at -0.9% vs. -7.5% (YoY)

· Consumer non durables goods growth at 5.3% vs. 10.6% (YoY)