Feb Industrial Output Growth Seen At 5.2 pc.

India's industrial output probably rose 5.2 percent in February from a year earlier, picking up pace from the previous month on higher exports, the median forecast in a Reuters poll showed.

Forecasts from 27 economists ranged from 3.5 to 7.2 percent, markedly below the double-digit growth seen in the manufacturing sector a year ago.

Industrial output had risen an annual 3.7 percent in January.

The economy has expanded at more than 8 percent in the last three quarters, riding on strong manufacturing that contributes about 80 percent of the industrial output.

FACTORS TO WATCH

The HSBC Markit Purchasing Managers' Index , an indicator of manufacturing expansion , remained unchanged in March at 57.9 from February, the highest level since last November.

New orders helped maintain the strong pace of expansion but i nput prices climbed to

their highest in at least six years, signalling further inflationary pressures, the PMI survey showed.

India's exports jumped an annual 49.7 percent in February to $23.6 billion, while imports rose 21.2 percent to $31.7 billion, latest government data showed.

Wholesale price inflation , the main gauge of prices in India, unexpectedly accelerated to 8.31 percent in February, and the data for March data is due on April 15.

Economists and bond traders expect the central bank to raise benchmark short-term interest rates by 25 basis points at the annual policy scheduled on May 3.

The Reserve Bank of India has increased rates eight times a little over 12 months and has warned of inflationary pressures and emerging risks to growth.

MARKET IMPACT

Bond and overnight indexed swaps (OIS) markets have largely discounted industrial growth at 5.0 to 5.3 percent.

If the output growth comes below 4 percent or above 6.5 percent, the market may see some movement in either direction but the quantum of move would be clear only after the government auctions a fresh 10-year paper on Friday.

Traders said the cut-off yield for the 10-year bond would set the tone for both the bond and swap markets for the coming few weeks, unless the data is a major surprise or shock.

Source : economictimes.indiatimes.com