December 2010 IIP numbers at 16.8

IIP hit the highest growth in a Month in almost a decade when December numbers were announced at 16.8%!!

Brace for a GAP up on Monday!!! And maybe trigger a Pre budget rally too!!!

That's great news .. and mind boggling number..
My immediate reaction was to dig into my database and analyse something.

So here are my findings

In the months listed below in first column, we had IIP > 12% since 1998.Column following that gives the return over next 1month, 2month, 3month and 6 month.

Last row also gives the average..

So, no doubt we should be looking for healthy gains of atleast 21% in next 6 month.

But like it is always hear, this time it is different.. lets see the next occurance

We had 12.2% IIP growth in Oct-07.. but the returns have been all -ive after that. Similarly, the the return of Dec-09 are also -ive for 1 month period.

So what is next ? Why market is not respecting such great number ?

IMO, I will consider it as "This time it is different" and atleast latest facts are telling me that. So I would excercise caution and take each day as it comes.

Happy Trading the macro-economic numbers..

AW, I can assure you atleast 20% return on Nifty within 6 months time frame or even less than that... after US market's move and china's rate hike... err wait a minute what I am talking I do not believe in news... ok... Nifty is going to attempt one final leg down to complete a mega bullish pattern and run to breach 5300 this time... so given that from a level below 4500 to 5300... that accounts for over 20% returns

if there is such a huge jump in one month, the data may be inaccurate. it cant be -1 some 4 months back and suddenly now at 16.8. there is no scintific approach to these calculations ..

market has its own mechanism to ignore/discount such data

for a day we may see some upward move. in any case dow has gone up, so we will have a gap up on monday

vikas, the returns that I have are based on the month's close to the month close after 1 mnth, 2mnth etc.. It doesn't cover intermediate low to intermediate high.

I also believe that it will break 5300 but question is when ? And specailly looking at current global macro ecoomic signals, I am favouring more of a side way market then anything else. Quite possible we will see 5300 as upper range for few months.

Anyway, let market tell us that. so far it is a big picture reading.. Ofcourse I can always be proven wrong on it. (What if RBI increases rate and people decide to jump no Rs. i.e. Dollar flow in India.. We might see another crazy run. My feeling is, Central banks will go into experiments mode now and try various strategy to pull out liquidity/control inflation. And they hope that some of those strategies will work without pushing the economy back into recession).

Happy Trading what we see.

Bandlab2, these are YoY change in numbers of 16%. Current reading of 331.7 is all time high of industrial production. Prev high was 305 which was in Mar-09. Last 2 Dec numbers were 284 and 284.7 which is almost no change. So this month we were actually we are comparing life time high numbers to one of the worsk number and hence no doubt the % change looks so great.

These numbers go are submitted to IMF by conuntries central bank, so I don't think they will be drastically wrong. Generally we see the good number in IIP during Dec and March. So lets what comes next.

Lets wait for 12-March to know the numbers of Jan before making any decision.

Happy Trading

Interesting discussions here. The bottom line in the short term is liquidity - the same socalled Smart Money that was investing at 5200 is pulling out money at 4700 because their investors are moving away from "risky assets" - even if those risky assets are showing good macro fundamentals. I hope I am proved wrong but I strongly feel given that so many people are trapped at higher levels - either a panic selling bout or a time wise patience test has to happen first. On the flip side, the local smart money wants a pre budget rally badly to palm off some of those low quality and once in a year traded railway, fertilizer, textile and what not 10 to 20 bucks stocks to unsuspecting retail guys.

Regards,
Enygma.

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Usually when IIP numbers rise significantly, economically it is time for hike in interest rates. This is just the fact of economic models that I am mentioning. Can someone research the same relation with respect to Indian market's. If you see this in context of other market's Australia did it after witnessing such numbers. Similar fears are beginning to emerge in China. So am sure this would imply to India as well.

I don't have IIP and interest rate historical data. Hence it would be great if someone could map this out for our own economy.

These numbers will also encourage government to withdraw the stimulus in the budget along with a hammer of rate hikes... so beware.. of these numbers....
of course a gap up on Monday but the closing is not sure...