Key Takeaways - IIP Mar 2013

Index of Industrial Production (IIP) has grown at 2.5% for March 2013 (slightly above market expectations of ~2.4%) compared to 0.5% in February 2013 (MoM) (revised downward from 0.6) and -2.8% in March 2012 (YoY). The cumulative growth for the period FY13 stood at 1.0% vs. 2.9% over the corresponding period of the previous year.

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

Our market has shown remarkable recovery during last one month led by global surge in liquidity and supported by life time high index level of developed markets like US & Europe. So far the Q4FY13 results has been broadly in line with the expectations with no major disappointment. Going ahead investors will keep an eye on further reforms to be taken by the government to bring back economy on growth path.

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. We expect markets to broadly remain range bound with profit booking emerging at higher levels.

Sector-wise growth indicator

· Manufacture sector growth at 3.2% vs. -3.6% (YoY)

· Mining sector growth at -2.9% vs. -1.1% (YoY)

· Capital sector goods growth at 6.9% vs. -20.1% (YoY)

· Electricity sector growth at 3.5% vs. 2.7% (YoY)

· Basic goods growth at 2.6% vs. 1.1% (YoY)

· Intermediate goods growth at -0.2% vs. 0.0% (YoY)

· Consumer durables goods growth at -4.5% vs. 1.2% (YoY)

· Consumer non durables goods growth at 6.5% vs. 1.0% (YoY)