Some reasons to cheer

After remaining sluggish for a significant period, the manufacturing sector had something to cheer about as data showed the core sector — comprising energy, cement, steel and fertilizer — rising to a four-month high in October, along with signs of recovery in car sales and factory activity hitting a near two-year high in November. The robust core sector data, which accounts for nearly 40% of the index of industrial production (IIP), came a day ahead of the Reserve Bank of India’s (RBI’s) monetary policy review. The core sector grew an annual 6.3% in October compared to 1.9% expansion in the previous month and a decline of 0.1% in October 2013. The sharp rebound, which augurs well for industrial output data due later in the month, was powered by coal and electricity sectors, which posted strong expansion.Three sectors — cement, fertilizer and natural gas — remained sluggish.
Separate data showed that manufacturing activity hit a near two-year high in November on the back of strong foreign and domestic orders. Rising from 51.6 to 53.3, the HSBC Purchasing Managers’ Index (PMI) reached a 21-month high in November, the 13th consecutive month of expansion.
Car sales recovered after two straight months of decline in November, providing some relief to the sector weighed down by slowing demand and high interest rates.
Maruti stayed strong with a growth of 17% in the domestic market at sales of one lakh units against 85,510 units in the same month last year. Hyundai, the second-biggest maker, also reported positive numbers as its domestic volumes were up 6% at 35,511 units against 33,501 units in November last year.
Sales for the car industry had slackened in the festive months of September and October, and year-on-year volumes were negative. Wholesale deliveries were down 1% in September compared to 3% in October.
A few companies as well as industry body Society of Indian Automobile Manufacturers (Siam) fear that sales may slip into the negative for the third year in a row if the economy does not pick up in pace and excise duty relief packages are not extended.
High interest rates have been a key factor behind the decline in the car industry for the last nearly three years. The players are still worried as sales have been up only 3% in the April-October 2014-15 period.
The government, meanwhile, reduced import tariff value on gold to $388 per 10 grams and on silver to $540 per kg, following global price trends, reported agencies. The tariff value on imported gold was $401 per 10 grams and silver at $575 per kg for the last fortnight of previous month.
The import tariff value is the base price at which customs duty is determined to prevent under-invoicing. It is revised on a fortnightly basis taking, into account global prices. The increase in tariff value on imported gold has been notified by the Central Board of Excise and Customs. Globally, gold in Singapore, which normally sets price trend on the domestic front, fell 2.1% to $1,142.88 an ounce, the lowest level since November 7 and silver nosedived by over 8% to $14.42 an ounce, the lowest price since August 2009.