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IIP slowing down

IIP slowing down
The Index of Industrial Production (IIP) grew by 4.8% for September 2008. The September 2008 IIP growth numbers has confirmed the slowing economic growth trend observed during past few months.

Core Infrastructure industries slowing down
The index of infrastructure industries holds a 26.7% weight in Index of Industrial Production (IIP). The index reflecting growth in the core infrastructure sector has indicated a relatively slower growth for the April-September 2008 period at as 3.9% .

RBI Measures to boost liquidity
CRR and Repo rate cut by 350bps cut in CRR to 5.50% from and also a 150bps reduction in Repo Rate to 7,5% from 9.0% RBI has allowed HFCs to raise up to $10 mn or 50% of the net owned funds as ECB.
RBI reduced the provisioning on standard advances in the commercial real estate sector, personal loans, capital market exposure and NBFCs (ND) to 0.4% from 2.0% previously.

Corporate capital expenditure to grow at a slower pace in 2008-09.

For 2008-09 companies have institutional assistance aggregated to Rs 1483bn against Rs 1252bn for the year 2007-08. The total capital spending envisaged fro the year 2007-08 was higher at Rs 2451bn if the aggregate capital expenditure were to surpass the 2007-08 levels, fresh envisaged capital expenditure in 2008-09 must be above Rs 719bn.

Loan growth outlook remains positive, FY09 loan book growth at over 20% yoy. Liquidity conditions improving now, fund raising picks up. The quality of builder’s loan book, comprising of 12% of the total outstanding loan book, remains healthy.Buy HDFC with a revised price target of Rs 2050.