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State Bank of India’s Composite Index (CI) lost momentum in June, indicating moderate growth as against high growth in the previous month.
The CI, which is an indicator of manufacturing activity in the Indian economy, in June declined to 53.2 (moderate growth) from 56.5 (high growth) in May.
The declining momentum in credit growth is likely to have started making an impact and this is leading to decreasing momentum in the index of industrial production (IIP) growth, according to Ecowrap, a report brought out by SBI’s research team.
The report noted that exports growth and SBI’s yearly index are correlated and with exports showing some month-on-month traction in May 2015, IIP numbers for May is likely to have kept on the positive momentum.
However, on the flip side, with the June index reflecting a loss in month-on-month momentum, it is likely that export growth may be weak going forward, the report said.
Pointing out that corporate results continue to be disappointing, the report observed that out of the total sample of 3,961 companies, 35.7 per cent are PAT (profit after tax) negative in FY2015 compared to 30.7 per cent in FY2014.
Mid-sized companies with turnover between ₹100 crore and ₹500 crore are the hardest hit (topline as well as bottomline), with a PAT de-growth of 84.8 per cent.
SBI’s Corporate Pricing Index for the month of May contracted to -0.41 per cent (-0.25 per cent in April 2015), indicating continuing margin pressure.
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