India reported first negative IIP numbers (Index of Industrial Production) in 15 years.IIP number fell to -0.4% in this October which was +12.2% in October, 2007. This is shocking unexpected negative news. India is really heading towards serious slow down. Unless Government will not take quick measures to propel economy, India will not even report 6% growth in GDP. Indian real economy will be caught in cyclical events of slow consumption, production cuts, job losses and decrease in demand etc. We have to see how Government will save Indian economy from this severe economic crisis.
Shocking IIP statistics:
1. India’s industrial production (IIP) dipped 0.4% in October, the first negative showing in 15 years. This is a serious bad news.
2. India’s exports fell by 12% in October. We will see many negative surprises in Q3 results and stocks will be rerated negatively in the coming months.
3. 2% dip in FMCG sales growth: It means people are spending less even on basic needs. Don’t forget that this happened in the festival month of October.
Significant economic estimates:
1. India will head into deflation by mid-2009 due to persistent fall in prices (lack of demand, fall in commodity prices and reduction of taxes) – HDFC and Normura.
HDFC Bank estimates on Inflation:
June, 2009: -0.8%
September, 2009: -1.4%
December, 2009: 3.4%.
2. Toyota annual earnings estimates:
2007-08: 2.27 trillion
2008-09: 420 billion yen. What a fall!
Toyota expected to report losses in the second half of the 2008-09.
3. Crude oil price:
Goldman Sachs: Crude oil price may fall to $30 level in 3 months.
Positive Stock Market news:
1. World Bank will provide $14 billion loan to India in the next 3 years for infrastructure projects.
2. Japan announced $67 billion stimulus package. Japan already announced $286 billion stimulus package.
3. GTL Infra is buying back FCCBs which is a good news. Closely watch this scrip for long term.
Negative Stock Market news:
1. Indiabulls Retail is facing complaints of non-payment of dues from vendors in several cities across India with claims ranging from Rs6-45 lakh.
2. S&P cut Tata Motors rating from “BB” to “BB-”.
Read - Tata Motors Downgraded by S&P Investment research
3. Many companies are either delaying or defaulting on their advance tax payments. Why?
4. Airlines reported 22% fall in passenger traffic in November.
5. Pharma companies will be hit due to fall in generic sales. Who will be spared?
6. DLF cut deliverable targets by 33% for 2008-09 due to lack of demand.
7. Russia has officially entered into recession (Government statement).
Source: Exerpts from Stock Market Guide Blog
