Dismal numbers expected for June industrial output

Index of industrial production (IIP) data for the month of June is expected today; and a number of measures are also expected to be announced by the finance ministry, according to an analysis by CNBC-TV18.

Domestically, it will be one plus and one minus for the rupee, the analysis says. The fact that something is going to be announced by the government will keep people from shorting the rupee too much. Also, the fact that the Reserve Bank of India (RBI) has decided to squeeze out even more liquidity is also a sense of purpose from the RBI and therefore, the rupee definitely starts on the front foot.

But we will have to watch out for how the foreign institutional investors (FIIs) and equity funds react since this is definitely going to mean higher base rates by all banks and will impact gross domestic product (GDP).

A CNBC-TV18 poll threw up minus 1.3 per cent for the IIP data, which is hardly a pleasant number. In fact, that makes the entire April-May-June quarter almost zero, or minus 0.3 per cent if one goes by the fact that there was a negative reading even in April.

The other negative that the markets will watch out for is electricity generation figures. It was the only thing holding up and even that is expected to come in negative. Manufacturing anyway was not doing too well.

The core sector numbers that account for about 38 per cent of the IIP have already shown a very weak number at 1 per cent. Therefore, there is not much expectation by way of IIP but it isn't usually very market-moving. One, it comes at 5.30pm when the markets are closed, and by the next day the markets analyse these numbers to the hilt.

Also, IIP lately has not had too much of an impact. Growth anyway is doing badly. We do not need the IIP's evidence, we have seen auto sales, we have seen core data, we have seen corporate earnings and therefore, it is kind of absorbed by the market. It may not be market-moving but it will be confirmation of the terrible growth slowdown in the country.