Weak performance of capital goods and consumer durables results in 0.5% contraction of industrial output in March 2014, despite healthy performance of consumer non-durables
A pickup in investment activity is unlikely to take root until H2FY15, acting as a drag on overall manufacturing growth. Moreover, with a Repo rate cut highly improbable in 2014, interest rates would remain sticky and limit the improvement in consumption sentiments. Nevertheless, sectors like passenger vehicles (PV) and medium & heavy commercial vehicles (M&HCV) are likely to record a positive growth in FY15 given the pent up demand following the sustained contraction in 2013-14. Additionally, some improvement in global growth would support exports to an extent in the near term, in line with the 5% growth of merchandise exports in April 2014. This would support a mild improvement in the growth of the manufacturing sector, following the stagnation in FY14.Powered by Capital Market - Live News
