The yearly SBI Composite Index for Oct'15 stood at 53.6, compared to last month index of 53.9 . However, the monthly index increased to 50.8 in Oct'15, from 48.4 in Sep'15.
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. IIP is also driven majorly by manufacturing particularly capital goods as revealed by higher ex-mining and ex-electricity growth.
The sequential growth in ASCB credit was at 12-month high as of fortnight ended Oct 2, 2015 and our internal prognosis suggests that sectors like power, steel, green energy, hydrocarbon and telecom will see a strong credit demand in the coming quarters.
The bank said, 'We expect a smart growth in 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 suggests that RBI move would release capital worth Rs 77.85 billion for entire banking industry.'
'As our SBI index predicts the industrial growth in 2-month advance, our index numbers suggest around 7% growth in IIP for either the month of Sep'15 or Oct'15, or possibly both,' it added.
Further centre has decided to extend the disbursement of the recently announced Rs 60 billion soft loan to sugar sector October 16.
The index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. Index above 50 implies growth over previous respective period and less than 50 will suggest a contraction over respective period.