India’s factory output, measured by the index of industrial production (IIP), contracted -1.8 per cent in June 2012 from the same period in the past fiscal, against expectations of 1 per cent growth.
The figure for May has been revised to 2.5 per cent from 2.4 per cent. Forecasts ranged from a decline of 2.7 per cent to a rise of 2.5 per cent.
Manufacturing, which constitutes about 76 per cent of industrial production, shrank to -3.2 per cent from a year earlier, data showed. The biggest drag, however, was capital goods, which slumped to -28 per cent.
The decline in IIP was partly on account of the high base effect.
"-1.8 per cent has to be read in terms of significant base effect. Capital goods are clearly the significant driver in terms of taking the growth in the negative territory... even sequentially the momentum has been slowing," Dr. Shubhada Rao, chief economist at YES Bank told NDTV Profit.
Shares in power equipment manufacturer BHEL and engineering and construction firm L&T saw selling pressure after a sharp decline in capital goods production.
The deceleration suggests that the economy remains on a slowing course and the pickup in the pace of factory production in May following a contraction the previous month may have been a blip.
Industrial output accounts for a little over 15 per cent of gross domestic product (GDP) and the consensus points to more weakness ahead for the Indian economy, which grew at its lowest annual rate in almost a decade, just 5.3 per cent in the quarter to March.
NDTV NEWS
www.marketfutureindia.com
The figure for May has been revised to 2.5 per cent from 2.4 per cent. Forecasts ranged from a decline of 2.7 per cent to a rise of 2.5 per cent.
Manufacturing, which constitutes about 76 per cent of industrial production, shrank to -3.2 per cent from a year earlier, data showed. The biggest drag, however, was capital goods, which slumped to -28 per cent.
The decline in IIP was partly on account of the high base effect.
"-1.8 per cent has to be read in terms of significant base effect. Capital goods are clearly the significant driver in terms of taking the growth in the negative territory... even sequentially the momentum has been slowing," Dr. Shubhada Rao, chief economist at YES Bank told NDTV Profit.
Shares in power equipment manufacturer BHEL and engineering and construction firm L&T saw selling pressure after a sharp decline in capital goods production.
The deceleration suggests that the economy remains on a slowing course and the pickup in the pace of factory production in May following a contraction the previous month may have been a blip.
Industrial output accounts for a little over 15 per cent of gross domestic product (GDP) and the consensus points to more weakness ahead for the Indian economy, which grew at its lowest annual rate in almost a decade, just 5.3 per cent in the quarter to March.
NDTV NEWS
www.marketfutureindia.com
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