Industrial Activity to continue its expansion in February: ZyFin Research

ZyFin BCI, lead indicator of IIP, registers its second straight increase; at six-month high

ZyFin Research announced its Business Cycle Indicator (BCI) for the month of January 2014. The index, which is a lead indicator to the Index of Industrial Production (IIP), has registered a year-on-year growth of 4.8% in January as against 4.7% in December suggesting an expansion in industrial activity in February. This improvement, which follows the uptick in December, suggests that industrial activity has bottomed out.

Based on the latest estimate of the IIP, industrial activity continued to decline in December, as accurately pointed out by BCI in its November release. ZyFin now believes that IIP data will reflect a recovery in industrial activity from January.

ZyFin Research's BCI (INBFBCI) is an independent leading indicator of the business cycle in India. Since it indicates the state of the Indian business cycle more than two months prior to the release of IIP data, it allows reliable and advanced detection of turns in the business cycle. A three-month uptrend in the BCI signifies an improving business cycle and vice versa.

The key highlights of the ZyFin Research Business Cycle Indicator for January 2014 are:

The BCI grew by 4.8% in January 2014 as compared to 4.7% in December. This is the highest growth rate recorded since July 2013.

Improving trends have been observed in economic indicators, such as revenue from railway freight, electricity generation, domestic air travel and external sector.

Concerns still remain over rising non-plan expenditure and constrained money supply in the economy.

Giving his views on the December numbers, Debopam Chaudhuri, Vice President of Research and Development, ZyFin Research, said, Consumer confidence has been inching up for the last three months as measured by ZyFin's Consumer Outlook Index. This further lends support to the bottoming out of industrial activity.

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