InvestorQ : What is your quick take on the core sector numbers that the government announced on Friday 01, January?
Lavanya Subramanian made post

What is your quick take on the core sector numbers that the government announced on Friday 01, January?

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Anamika Sodhani answered.
3 weeks ago
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On the last working day of the previous month, the core sector growth number of the eight key infrastructure sectors was announced for the month of November 2020. The core sector continued to contract and in Nov-20 it was at -2.6%. It may look a tad disappointing because the core sector had almost come to par in Sep-20 but has deteriorated since.

Core sector is critical because if all these 8 infrastructure sectors are added up, they account for 40.27% of the GDP and a significant chunk of the GDP too. In fact, November marks the ninth consecutive month of negative core sector growth in India. In Sep-20, core sector had got as far as -0.1% but has once again slipped after that.

One of the big concerns on the numbers was that the typical star segments that have been in the positive have faltered. While they remain in positive growth, the momentum has come under question. In fact, in Nov-20 we saw the momentum of all these sectors falter by about 400-600 basis points, which explains why the core sector came under pressure.

While the traditional stars like fertilizers, coal production and electricity generation saw lower growth, a critical sector like cement dipped from positive growth to negative growth during Nov-20. Even steel continues to show negative growth despite the pick-up in construction activity. The concern is that core sector stands at -11.4% in Apr-Nov period.

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