IIP and its relation with stock market

2. • It is a composite indicator that measures the short-term changes in the
volume of production of a basket of industrial products during a given period
with respect to that in a chosen base period . ( definition by CSO)
• Estimated and published on a monthly basis by CSO
• All India IIP data is used for estimation of GVA of manufacturing sector on
quarterly basis
• Constructed by secondary data
• Base year 2011-12
Sector Items Item groups Weight (%) 11-12 Weight (%) 04-05
Mining 29 1 14.373 14.157
Manufacturing 809 405 77.633 75.527
Electricity 1 1 7.994 10.316
839 407 100 100

3. The index at group level/ 2-digit level of NIC is compiled by using the Laspeyere s’ formula,
I =
Σ (𝑊𝑖∗𝑅𝑖)
Σ(𝑊𝑖)Where
Ri is the production relative
Wi is the weight of an item.
In india IIP is released with a lag of 2 months

4. Annual indices of industrial production as per use-based classification
USE-BASED CATEGORY WEIGHT 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Primary goods 34.05 100.5 102.8 106.7 112.0 117.5 121.8 126.1
Capital goods 8.22 100.3 96.6 95.5 98.4 101.5 105.6 108.4
Intermediate goods 17.22 105.1 109.9 116.6 118.4 122.3 125.1 126.2
Infrastructure/ construction
goods 12.34 105.4 111.4 117.0 120.3 125.0 132.0 141.7
Consumer durables 12.84 104.9 110.8 115.2 119.1 122.6 123.6 130.4
Consumer non-durables 15.33 106.1 110.0 114.2 117.2 126.5 139.9 145.5

5. Annual growth rates as per IIP (%) calculated w.r.t. previous year
USE-BASED CATEGORY WEIGHT 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Primary goods 34.05 0.5 2.3 3.8 5.0 4.9 3.7 3.5
Capital goods 8.22 0.3 -3.7 -1.1 3.0 3.2 4.0 2.7
Intermediate goods 17.22 5.1 4.6 6.1 1.5 3.3 2.3 0.9
Infrastructure/ construction
goods 12.34 5.4 5.7 5.0 2.8 3.9 5.6 7.3
Consumer durables 12.84 4.9 5.6 4.0 3.4 2.9 0.8 5.5
Consumer non-durables 15.33 6.1 3.7 3.8 2.6 7.9 10.6 4.0

6. Current scenario……..
• Currently its 130.2
• Cumulative growth for April – june period stands at 3.6% as compared to 2018
• The Eight Core Industries comprise 40.27 per cent of the weight of
• The combined Index of Eight Core Industries stood at 131.4 in June, 2019, which was 0.2 per cent higher as compared to the
index of June, 2018.
Sector Indices Growth
Mining 106.6 1.6%
Manufacturing 130.1 1.2%
Electricity 173 8.2%
Industries Indices Growth
Primary goods 127.7 0.5%
Capital goods 102.4 -6.5%
Intermediate goods 136.9 12.4%
Infrastructure goods 139.8 -1.8%
Consumer durables 126.2 -5.5%
Consumer non durables 138.5 7.8%

7. Effect on stock market……..
• Most important macro parameters
• The IIP and core sector weightage has a vey important relationship as it lies in core of macro analysis of equity market
• These core sector includes coal , crude oil , natural gas , refinery products , fertilizers , steel , cement and electricity
• Core sector is a turnover indicator
• Economic activity picks up when core sector picks up
• Sensex rises or tumbles with strong IIP growth or weak IIP data respectively .

8. 150.9
137.9
160.1
153.7
164.7 159.9
₹ 187.10 ₹ 182.85
₹ 197.90
₹ 186.40 ₹ 191.20
₹ 206.90
0
50
100
150
200
250
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19
iip vs mp
IIP share price

9. CORE SECTORS IIP GROWTH INDEX MAY PRICE JUNE PRICE
Coal 3.2% 123.8 ₹252.9 ₹253.75
Crude oil -6.8% 84.7 ₹171.85 ₹167.75
Natural gas -2.1% 66.0 ₹165.55 ₹155.85
Refinery products -9.3% 121.4 ₹62.25 ₹60.45
Fertilizer 1.5% 110 ₹630.8 ₹626.05
Steel 6.9% 153.7 ₹50.6 ₹50.7
Cement -1.5% 148.5 ₹233.4 ₹212.9
Electricity 7.3% 171.6 ₹191.15 ₹206.9
0.2% 131.4