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MOSL: Morning India (13/June/18): 1. EcoScope (No surprises in CPI/IIP data); 2. Healthcare (Volumes healthy, but price pressure evident)

MOrning India (13/June/18): 1. EcoScope (No surprises in CPI/IIP data); 2. Healthcare (Volumes healthy, but price pressure evident)

 

Today’s top research idea

EcoScope: No surprises in CPI/IIP data; Core CPI crosses 6%, likely to test 7% in June

• Headline CPI inflation came in at a four-month high of 4.9% YoY in May-18, broadly in line with our/market estimate of 4.8%/4.9%.
• While food inflation picked up slightly to 3.3% in May from 3% in the previous month, core CPI rose to a 46-month high of 6.2% (in line with our estimate).
• Separately, IIP grew 4.9% in April-18, in line with our forecast but lower than consensus of 5.7%. Growth in the capital goods sector came in at 13%, while that in infra/construction goods and consumer non-durables was also healthy at 7.5% and 7%, respectively.
• Overall, there were no surprises in today's data releases. We expect headline CPI inflation to rise to 5.4% in June-18 (due to an adverse base effect) and core inflation to touch 6.9% – if the RBI focuses on the latter, a rate hike in August (irrespective of the level of Kharif MSP hike) can't be ruled out.

Piping hot news

Issues raised by USFDA on Halol resolved: Sun Pharma

• The quality cloud over the Halol plant of Sun Pharmaceutical Industries Ltd has lifted, with the company stating that all the issues raised by the US Food and Drug Administration (FDA) have been satisfactorily resolved. "Sun Pharmaceutical Industries has received the establishment inspection report (EIR) from the US FDA for the inspection conducted at its Halol facility (Gujarat, India) during the period February 12-23, 2018.