March industrial output seen up 15% YoY

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Industrial output to rise 15% in March from a year earlier, the median forecast in a poll of 22 economists shows. This is almost in line with an annual rise of 15.1% in February.

Forecasts ranged from a rise of 12% to 16.3%.

Factors to watch:

Manufacturing should lead overall output growth, helped by buoyant domestic consumer demand, revival in exports, higher infrastructure spending by the government and more private investment.

A statistical low base a year ago will also help the output grow in double-digits for the sixth straight month.

However, a partial rollback of the fiscal stimulus in the February budget as well as rate increases by the central bank in March and April are likely to slow down the pace of growth.

Market impact

Although robust data would add to signs of a strong rebound in Asia's third-largest economy, which is projected to grow at least 8 percent in 2010/11 that began on April 1, the central bank is unlikely to tighten policy immediately.

Bond traders said yields, which have eased after the April 20 monetary policy, would not jump even if the data came in stronger than expected as uncertainties over euro zone debt problems were likely to keep interest rates steady at least until July.

Easing food prices and expectations for a good monsoon are also seen putting a lid on inflationary expectations.

The yield on the most-traded 8.20% 2022 bond , which climbed to an 18-month-high of 8.32% on April 16 ahead of the last policy meeting, has since dropped 45 basis points in a relief rally, according to Reuters data.

The Reserve Bank of India has raised its policy rates by 50 basis points over two months, citing a strong pick-up in the economy and accelerating inflation. Traders expect a further 25 points rise when it reviews policy on July 27.