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SBI Monthly Composite Index for the Month of May released

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The SBI Monthly Composite Index, a leading indicator for manufacturing activity in Indian economy, inched up from 46.8 in April 2015 to 53.8 in May 2015,

 

Key Points of the report :

  • The SBI Monthly Composite Index increased  from 46.8 in April 2015 to 53.8 in May 2015.
  • The yearly SBI Composite Index for May 2015 decelerated to 56.4 in May from 58.2 in April 2015,due to

o   Entrenched disinflationary impetus
o   Weak Demand

  • Future outlook

o   Credit Growth is expected to be moderate,
o   Commercial Vehicles Sales would be subdued
o   Weak Demand
o   Inflation will be on downside
o   Low Capex
o   Weak Corporate Earnings.
o   Retail inflation likely to be at sub-4 per cent within the next two-three months.
o   Infra activities will start possibly from the second half of this year.
o   Wholesale prices will remain in deep negative territory for most of 2015, if not the entire duration.
o   Overall,the outlook is bearish.

  • The report observed that it is imperative to improve sentiment further through another round of monetary easing.

About SBI Monthly Composite Index :

  • A leading indicator for manufacturing activity in Indian economy.
  • The SBI Composite Index have both monthly and yearly indices.
  • To represent the manufacturing sector, SBI is using the monthly Index of Industrial Production data rather than GDP figures
  • An index value of Less than 42 means large decline.

o   Value of 42 to 46 – moderate decline,
o   46 to 50 – low decline,
o   50 to 52 – low growth,
o   52 to 55 – moderate growth and
o   Above 55 – high growth.

  • The SBI Composite Index rivals the existing data point from British lender HSBC.
  • It has been developed on the basis of the bank’s internal loan portfolio, which mirrors the credit demand in the country, and other data sets available in public domain.