Expert views on November industrial output data

"I think the RBI will take comfort from the industrial output number as it shows growth is shaky but not negative. It also allows the central bank to continue to focus on inflation.

"In addition, the rupee continues to be volatile, which could have an impact on the imported inflation front. Therefore I do not expect any monetary easing from the RBI till end of the current fiscal year.

10 short-lived CEO terms

"The central bank is also likely to prefer bond buybacks to a cut in the cash reserve ratio since a CRR cut will look contradictory to current monetary stance."

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI

"IIP growth has pleasantly surprised, but there are concern over its sustainability given the overall slowdown in capital investment sentiment.

"The RBI's stance will be more influenced by the core inflation number for December rather than today's IIP data."

The gutsiest calls of 2011 in the US

A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

"The worry and alarm after October should tone down. There are data issues in IIP, and that is leading to volatility, but the genuine problems in supply sector are getting resolved, particularly in coal and auto.

"For October, the working days were less so that exaggerated the fall. I think the November number shows that going forward we will see improved data. There is a slowdown but there is no need for undue worry.

"I still think a 50-basis-point cut in banks' cash reserve ratio is likely in RBI's January 24 policy review."

MARKET REACTION:

The BSE Sensex briefly turned positive after the data from down 0.4 percent beforehand.

The benchmark 10-year 8.79 percent, 2021 bond yield rose 3 basis points but later trimmed the rise to 2 basis points at 8.25 percent as the market had already begun pricing in no change in interest rates.

The benchmark five-year swap rate and the one year swap rates were up 6 basis points and 3 basis points.

The partially convertible rupee was unmoved at 50.79/80 per dollar.

BACKGROUND:

- Infrastructure sector output, which contributes nearly 38 percent to industrial production, grew 6.8 percent in November from a year earlier.

- After falling for four months, car sales rose for a second month in December, climbing 8.5 percent from the same month a year earlier.

- Manufacturing activity surged to a six-month high in December thanks to a spike in factory output and new orders from domestic and international firms, a survey of purchasing managers showed last week.

- Inflation eased to 9.11 percent in November but has stayed above 9 percent for a year.

- The Reserve Bank of India chief said in a BBC interview this month it is likely to begin easing monetary policy to address concerns about economic growth though it is not known when it will take place and "in what shape it will roll out".

- In December, the RBI paused its aggressive tightening cycle that involved lifting rates 13 times since March 2010 as the Indian economy tussles with a worrying combination of weak growth and high inflation.