IIP numbers robust: Rajesh Jain, Market Strategist

Rajesh Jain, Market Strategist, in a chat with ET Now talks about the IIP numbers.

What’s your sense, do you think a lower IIP has sort of eased off concerns of an immediate tightening by the Reserve Bank?

I am a little confused because I failed to see the connection. IIP numbers for March a bit of a slowdown is either reflecting the fact that inventories are packed to meet the year end demand or in anticipation of what the RBI could be doing in the April policy.

Companies would have chosen not to pump in production because you were also seeing a very high up move in commodity prices in the month of Jan and Feb. So if I was running a factory then I would probably slowdown my production rates for the simple reason that I was at the peak of the commodity price cycle and moving towards in the year end kind of situation. If my inventories were packed up then there wasn’t really any need to pump up production.

If April continues a decline then it is a signal that the consumption patterns are probably slowing down and there could be a bit of a U-turn or the base effect is kicking in but until then I think we are trying to read too much into a minor tweak in the statistics and starting to worry about nothing. I think it’s a very robust figure, a good double digit figure and coming on the back of a recovery from a recession I think it signals continued confidence in consumption.