ET NOW-Edelweiss lead index up 125 pts

MUMBAI: The ET NOW-Edelweiss lead indicator index (EELII) which has crossed 125 points, is showing signs of strong economic growth. Siddhartha Sanyal, senior economist, Edelweiss speaking to ET NOW said, “Commercial vehicle production is up significantly, resource mobilisation from the primary markets is going up.

Bank credit growth is up, cement dispatches are good. So, there are a good number of positives at the moment. The only negative as far as EELII is that the government will gradually unwind the strong expenditure it had been carrying out for bulk of 2009, so that’s the factor that will be tempering the growth of EELII, going ahead.”
But corporate profitability will not really be impacted as the Reserve Bank of India (RBI) has shifted its stance from growth management to taming inflation, says Mr Sanyal.

In fact, more than the corporate bottomline, commodity prices and wage pressure are much more pertinent . “Even if the interest costs go up a bit, there are alternate sources of fund. If there is a big disconnect in the short-term market and the bank credit market you can continue with the commercial issue in commercial papers which the corporates have done quite significantly over the past one year,” Mr Sanyal added.

He also said that the global market liquidity is still pretty easy and barring a few episodes like that of Greece or Goldman Sachs, corporate bottomlines are safe.

The ET Now Edelweiss Lead Indicator Index (EELII), is a composite weighted average index of a number of macro-variables exhibiting strong predictive ability of the core trends in the Indian economy.