May IIP seen at 1.5%; CPI at 9.2%: CNBC-TV18 Poll

The consumer price index (CPI) for June and the indusial output for May will be declared today at 5:30 pm after market hours. While the market may not react much to it, but expectations are that the May industrial output number will be a disappointment, which will prove that little green shoots of growth seen in March and April will be washed away, reports CNBC-TV18’s Latha Venkatesh.

According to CNBC-TV18, May IIP is seen lower at 1.5 percent versus 2.3 percent month on month. Meanwhile June consumer price inflation or CPI is seen at 9.2 percent.  Also read: Subbarao says inflation still high; bond yields rise
The core sector data stood at 2.3 percent, which is bad because core sector refers to 38 percent of the goods included in the Index of Industrial Production (IIP). If that set grew at 2.3 percent, then one cannot expect much from IIP. Besides the core sector, auto sales and Purchasing Managers Index data was poor as well.
But even this may not happen given certain revision in May numbers like the gas output in May 2012. When the core sector numbers were released, CNBC-TV18 learnt that the gas output in May of 2012 had been revised higher. That is why the core sector number for May is lower. If the same revision happens in the IIP index as well then it would be lower than 1.5 percent.
Meanwhile, the 9.2 percent CPI in June would be a bad number – it stood at 9.3 percent in May and 9.39 percent in April. So, it is not able to get below that market. The positive perhaps will come from non-food elements. The non-food CPI is expected to be falling continuously; it fell to 8.4 percent in the previous month and is expected to fall further in the coming months. That will be the positive, but it has been countered economists think by higher vegetable price and therefore we will be stuck with a high CPI number. This will have a telling impact on what the Reserve Bank of India does on July 13. If it indeed comes as high as 9.2 percent then one should expect some reaction in bond prices and banking stocks on Monday.