Tuesday, October 20, 2015

SBI Composite Index for October 2015

Mumbai, October 19, 2015: In continuation of the launch of the SBI Composite Index on December 9, 2014, State Bank of India herewith releases yearly as well as monthly Composite Index value for the month of October 2015.
The yearly SBI Composite Index for Oct’15 is at 53.6 (Moderate Growth), compared to last month index of 53.9 (Moderate Growth). However, the Monthly Index increase to 50.8 (Low Decline) in Oct’15, from 48.4 (Low Decline) in Sep’15. The upturn has been majorly driven by manufacturing, while mining and electricity are still acting as a drag on economic activity. Besides, the positive trends in capital goods sector suggest the possible pick-up in economic momentum. IIP is also driven majorly by manufacturing (particularly capital goods) as revealed by higher ex-mining and ex-electricity growth.

The m-o-m growth in ASCB credit was at 12-month high as of fortnight ended 02 Oct’15 and our internal prognosis suggests that sectors like power, steel, green energy, hydrocarbon and telecom will see a strong credit demand in the coming quarters. We also expect a smart growth in in personal loan segment especially in housing (due to rationalization of risk weights and LTV ratios) and in vehicle loan (due to festive season). The rationalization of risk weights and LTV ratios will equip banks with more capital, and our internal estimate (albeit based on certain assumptions) suggests that RBI move would release capital worth Rs 7,785 crore for entire banking industry. As our SBI index predicts the industrial growth in 2-month advance, our index numbers suggest around 7% growth in IIP for either the month of Sep’15 or Oct’15, or possibly both.

 Further Centre has decided to extend the disbursement of the recently announced Rs 6000 crore soft loan to sugar sector October 16. Overall, “Minimum government, maximum governance” can yield some improvement by about minimum of 4% of net sales or so for sugar sector.

 The Index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. Index above 50 implies growth over previous respective period and less than 50 will suggest a contraction over respective period. 

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