SBI Composite Index index nearly flat in October 2015

Index numbers suggest around 7% growth in IIP for September-October 2015

The yearly SBI Composite Index for October 2015 stood at 53.6 (Moderate Growth), compared to last month index of 53.9 (Moderate Growth). Meanwhile, the Monthly Index increased to 50.8 (Low Decline) in October 2015, from 48.4 (Low Decline) in September 2015.

The yearly SBI Composite Index for the month of October 2015 is suggesting continued pick-up in economic momentum going forward. The upturn has been majorly driven by Manufacturing, while Mining and Electricity are still acting as a drag on economic activity. Besides, the positive trends in capital goods sector suggest the possible pick-up in economic momentum.

The m-o-m growth in ASCB credit was at 12-month high as of fortnight ended 02 October 2015 and our sectors like power, steel, green energy, hydrocarbon and telecom are witnessing a revival in credit demand in the coming quarters.

SBI Economic Research expect a smart growth in personal loan segment especially in housing (due to rationalization of risk weights and LTV ratios) and in vehicle loan (due to festive season). 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 SBI index predicts the industrial growth 2-months in advance, the index numbers suggest around 7% growth in IIP for either the month of September 2015 or October 2015, or possibly both.

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