Wednesday, November 25, 2015

SBI Composite Index for November 2015

Mumbai, November 24, 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 November 2015.
The yearly SBI Composite Index for Nov’15 is at 6-month high at 54.5 (Moderate Growth), compared to last month index of 53.5 (Moderate Growth), suggesting continued pick-up in economic momentum going forward. Also, the Monthly Index increased to 51.6 (Low Growth) in Nov’15, from 50.9 (Low Growth) in Oct’15.
The m-o-m growth in ASCB credit was at 12-month high as of fortnight ended 30 Oct’15 and our internal prognosis suggests that credit growth is likely to grow in infrastructure sectors like Power and Roads. We also expect a smart growth in personal loan segment especially in housing (due to rationalization of risk weights and LTV ratios). 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 this RBI move would release capital worth Rs. 7,785 crore for entire banking industry. As our SBI index predicts the industrial growth 2-months in advance, our index numbers indicate acceleration in industrial production in coming months.
Further we hope the 7th PC to have positive impact on both Steel and Cement industries. Additionally, healthy order book if coupled with faster execution will show positive results for the capital goods and infrastructure sector. There is an immediate need to increase import duty on long steel products. The Government should also provide Infrastructure status to Steel industry.
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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