India's industrial production growth to disappoint with 3% contraction

After hitting an impressive 8.2% hike.

According to Nomura, medium and heavy commercial vehicle (MHCV) production contracted by 47.6% y-o-y in December after falling 41.7% in November. On a 3-month moving average basis, MHCV output contracted by 29.3% y-o-y in December from a decline of 15.7% in November.

Weak demand and excess inventory has kept output growth subdued.

Commercial vehicle production is one of the lead indicators of industrial production (IP) and lacklustre growth in this segment suggests that the industrial cycle has not yet decisively turned around.

Here's more from Nomura:

We expect November IP growth to contract by 3% y-o-y, much weaker than consensus expectations, after posting a surprise 8.2% increase in October due to weak demand and a loss of working days (due to the Diwali festival).

The December MHCV data suggest that a quick turnaround is unlikely and that industrial output growth still remains weak.

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