INDIAN MACROS - ARE THE WHEELS TURNING?

MACRO WHEELS BEGINNING TO TURN?

COMMERCIAL VEHICLE SALES IN DEC PICKING UP

-          ASHOK LEYLAND

M&HCV Sales +82% at 15950 Units

LCV Sales +69% at 3,303 Units

-          M&M

Domestic Tractor Sales +32% at 16671 Units

-          TATA MOTORS

M&HCV Sales +83% At 15828 Units

-          BAJAJ AUTO 3 WHEELER SALES

3-wheeler Sales +187% At  63785 Units

-          EICHER

CV Sales +50.4% At 6,087 Units

CORE SECTOR DATA IN NOVEMBER STRONG

(Low Base, High Commodity Costs, but up, nevertheless)

NOVEMBER 2017 CORE SECTOR GROWTH AT 6.8%

Core Ind growth at the highest level since April 2016

What Did Well  

Steel                  +16.6%

Cement             +17.3%

Refinery Pdts     +8.2%

Laggards:

Coal               -0.2%,

Crude            +0.2%

Fertilizers     +0.3%

Electricity     +1.9%

Natural Gas  +2.4%

In December So Far

Coal India December Offtake Strong at 53.44 mt vs target of 53.84 mt

Crude at $67/bbl Higher from Nov Levels of $60-63

Iron Ore: Strong Demand in Pellet Mkt. NMDC Has Hiked Prices

December 2017

Nikkei Mfg PMI @ 5 Yr High

GST Blues Settled?

2017   MFG PMI 

DEC      54.7

NOV     52.6

OCT      50.3

SEPT     51.2

AUG      51.2

JUL        47.9

Key Things To Watch –

Q3 GDP Data

Q3 Advance Tax Collections

GST Collection

BIGGEST WORRY

GST Collection is the biggest worry –

Declining since implementation, can this turn?

Jul:    94063 Cr

Aug:  90669 Cr

Sep:   92150 Cr

Oct:   83346 Cr

Nov:  80808 Cr

Reason why data needs to be watched -

The Biggest Confirmation of Growth would reflect in Tax Collection and the biggest visibility of growth would be witnessed in Credit Growth. Commercial Vehicle Sales have picked up, that means companies believe they can do more business going forward. To confirm that further, it’ll be interesting to watch if they’re putting their money where their mouth is and taking more loans to fuel CapEx.

Tax Collection – In my humble opinion, it’s the actual measure of growth. Why?
Consider this analogy, it’s akin to finding the parents of a child. There is a child you’ve found, only his mother can confirm she’s given the birth, while his father can at best only suggest/claim his fatherhood. Fatherhood is implied, motherhood is confirmation. The very same way, Revenue, production growth is the Father & Tax Payment is mother of growth. 

The Child = Growth,
Revenue/Income is the Father i.e, Implied Growth (Revenue is growing, which is why I’m the father of growth). That’s great, but the confirmation can happen only if Tax is Paid. That is, the Mother (I have paid taxes only cos I made profits, hence growth).