America's impending Government expenditure as well as recoveries in China post capacity clampdowns has resulted in a minor spurt in commodity prices

Evidently, there exists consistent growth in the basic and intermediate goods categories indicating healthy demand for raw materials and semi-finished items. However, despite these goods being fed into the supply chain, there appears to be no incremental investment taking place.

America’s impending Government expenditure as well as recoveries in China post capacity clampdowns has resulted in a minor spurt in commodity prices

Raw Material Inventories to Sales have steadily maintained a ratio of 21% and this tells us that investment in work in progress remains in line with expectations. This understanding is consistent with the WiPInv number (Rs. 0.31 billion) given by the RBI. 

Apart from the domestic situation, we are of the view that there is a possibility of certain Indian raw materials finding their way to export markets. America’s impending Government expenditure as well as recoveries in China post capacity clampdowns has resulted in a minor spurt in commodity prices. Acuité believes that the Basic Goods category will therefore continue to maintain a consistent trend.

Principal factors influencing the category  

(Updated as on March 15, 2017)