Analysts Cheer Better Than Expected IIP Data

India's Industrial output grew at the fastest pace in eight months in October 2020 at 3.6%, data revealed by the National Statistical Office (NSO) showed.

"Better than both our estimate of 0.8% and market consensus of 1.0%, Index For Industrial Production growth climbed up to 3.6% YoY in Oct'20 from only 0.5% a month ago and -6.6% in Oct'19. This was led by a turnaround in manufacturing activities in Oct'20.

While power generation grew double digits, mining activities continued to see contraction in Oct'20. Capital good production grew for the first time in 24 months in Oct'20 and infrastructure/construction activities grew at the fastest pace in 22 months.

Consumer goods production too grew >10% YoY in Oct'20, supported by both durables and non-durables,"Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services.

"Overall, better-than-expected growth in IIP in Oct'20 might have just been a case of high festive demand and whether the growth momentum continues is yet to be seen. In any case, we don't expect RBI to cut rates anytime soon," Gupta stated.