Activity levels have picked up in many of the domestic sectors India. The biggest improvement has taken place in consumer- and rural-exposed sectors. Auto, cement and new mobile connections have rebounded sharply and are running ahead of pre September 2008 levels. This, we believe, is largely on account of a boost to consumption provided by a government stimulus package to the rural economy (in terms of farm loan waivers) and government employees (through salary hikes). Similarly, even the production of metals (both steel and non ferrous) seems to have remained impervious or picked up since the slowdown. There has been a deceleration in growth of textiles and related sectors. However, production cuts are not dramatic and declines have seen some sequential improvement post-September in some categories.
Taffic data from major ports show that export tonnage has bounced back, while import tonnage has fallen.
The Indian consumer is likely to be more resilient. On an aggregate basis, gains accruing to consumers from direct and indirect stimuli (e.g. falling fuel prices, etc.) have been significant, far outweighing losses in incomes in other sectors. So, while growth of car and two-wheeler sales may not continue at 20%-plus levels, it is likely to remain positive.