SBI Composite Index for December 2015

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In continuation of the launch of theSBI Composite Index on December 9, 2014, State Bank of India herewith releases yearly as well as monthly Composite Index value for the month of December2015.

After reaching a 6-month high of 54.5 in Nov’15, the yearly SBI Composite Index for the month of Dec’15 lost momentum and stood at 52.0, its lowest in 5 months, suggesting moderation in economic activity going forward. The monthly index however increased to 52.7 in Dec’15 from 51.6 in the last month. The moderation has been primarily due to base effect.

However, the good thing is that the fortnight data of ASCB, indicate that credit off-take (YoY) shows some signs of improvement and is at 9.8% as on 27 Novt’15, compared to last year growth of 10.8% in 28 Nov’14. The incremental lending has been mostly to the personal loan segment, especially housing, reflecting resilience of consumer demand and the aversion of banks to stressed sectors.

Our internal prognosis indicates that the construction sector has witnessed an improved performance in Q2FY16 with execution picking up and margins on an upswing. Additionally, there are about 476 airstrips and airports in India. Reviving these, can bring down cost of flying. About 400 of them are closed and balance are used by commercial airlines. Most of the growth in aviation in India is actually coming from small towns. If connectivity between significant numbers of small towns is connected, the overall flying demand can provide boost to the aviation sector and the economy as a whole.

The Index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. Index above 50 implies growth over previous respective period and less than 50 will suggest a contraction over respective period.

 

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