India's industrial output growth rebounded in November from its first annual fall in more 13 years, but analysts said the strength may not be sustained and it would not alter the central bank's bias for easier policy. Industrial output rose a better-than-expected 2.4 percent in November from a year earlier, well above a revised decline of 0.3 percent in October and a forecast of a fall of 1 percent in a Reuters poll of economists.
Manufacturing production rose 2.4 percent in November from a year earlier, well above a decline of 1.2 percent in October. "This shouldn't upset the overall trend in interest rates as the Reserve Bank of India has been cutting rates when (industrial output) data was much more robust," said Amol Agarwal, economist at IDBI Gilts in Mumbai. "But this looks like a temporary rebound."
Economists said they expect industrial output to remain weak for the remaining part of the fiscal year which ends in March and into 2009/10. The unexpected strength saw the 10-year bond yield rise as much as 10 basis points from its level before the data, although the gain was later trimmed to 4 basis points. Asia's third-largest economy has slowed sharply as the impact of the global credit crisis hit key sectors such as real estate, automobiles, textiles and exports.