SBI Composite Index for July 2015

In continuation of the launch of the SBI Composite Index on December 9, 2014, State Bank of India herewith releases yearly as well as monthly Composite Index value for the month of July 2015.

The yearly SBI Composite Index for July 2015 declined sharply to 49.7 (Low Decline) from 53.2 (Moderate Growth) in June 2015. The Monthly Index also declined, however moderately, from 47.0 (Low Decline) in June 2015 to 46.7 (Low Decline) in July 2015. Going forward, IIP numbers for June may continue to be even weaker as the Yearly SBI Composite Index for June 2015 had witnessed a decline. The declining momentum in credit growth is likely to have started impacting and this is leading to decreasing momentum in IIP growth. ASCB Bank Credit growth on a year on year basis has continued to decline and reached 9.8% (26 Jun’15), compared to last year growth of 12.8%.

On the positive side, July’15 SBI index may signal that the deceleration in manufacturing momentum may be bottoming out. Government push on Infra, Defense and Renewable Power seems to be the three pillar of future growth in the Banking sector. The Indian road sector has drawn renewed interest in the wake of policy thrust by the new Government. Sectors like Textile- PFY (Polyester Filament Yarn), Wood and Wood product and Auto Components has started picking up in FY15 and outlook is positive for such sectors.

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.