In continuation of the launch of the SBI Composite Index on Dec. 9, 2014, State Bank of India releases yearly as well as monthly Composite Index value for the month of January 2015.

The yearly SBI Composite Index for January 2015 inched up to 52.1 (Moderate growth) from 50.6 (Low growth) in December 2014. In contrast, the Monthly Index has slipped from 55.4 (High growth) in December 2014 to 51.5 (Low growth) in January 2015. Moderation in the month on month index hints possible contraction in the yearly index after a while.

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.

Bank credit continues to remain sluggish and our internal model indicates there is typically a 2-6 month lagged impact on manufacturing activity from SBI credit portfolio. Interestingly, the impact is more pronounced in export intensive sectors, mining and automotive. It may be noted that the recent marginal pick up in bank credit growth is being driven to some extent by pick up in personal loans, primarily credit card outstanding. We believe that such increase may be attributed to the emergence of  e-retail platforms, and it remains to be seen whether this augurs well for the revival in consumer sentiment.

Shares of the bank gained Rs 10.10, or 3.31%, to trade at Rs 314.85 at the BSE (10.09 a.m., Thursday).