Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Market Whispers
Tax Planning
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
Market Commentary

| More

Economy: Inflation stays benign - Kotak

Posted On: 2017-10-15 08:48:57

Inflation stays benign. The September CPI inflation print at 3.28% has ensured that inflation stays in a range of 3.3%-4.4% for 2HFY18, lower than RBI's estimate of 4.2%-4.6%. However, with inflation trending up directionally and RBI's insistence on 4% target on a durable basis, a convincing case for a rate cut appears less plausible. But we will be watchful of any incoming data surprises and evolution of the fiscal stance for any meaningful shift in RBI's reaction function.

CPI inflation surprises at 3.28%

CPI inflation surprised on the downside at 3.28% in September (Kotak: 3.37%, consensus: 3.53%) after a downwardly revised 3.28% in August. Sharp contraction in food inflation ((-)1.4% mom) countered the unfavorable base effect and sequential increase in housing and fuel prices. Food inflation eased to 1.2% from 1.5% in August with sequential contraction in vegetables ((-)7.1%) and fruits ((-)1.6%) prices. High frequency mandi data indicates marginal seasonal uptick in cereals and vegetables prices ahead. Core inflation inched up to 4.4% from downwardly revised 4.3% in August with 'miscellaneous' items inflation remaining stable at 3.8%. Within 'miscellaneous' segment, 'personal care and effects' category increased substantially to 2.9%, partly reflecting the changes in the GST rates. 'Transport and communication' category increased 0.9% mom due to higher petrol and diesel prices. Housing inflation was at 6.1% reflecting consistent sequential increase due to 7CPC HRA impact.

Inflation set to trend up, but likely to still stay lower than RBI's estimates

Despite food inflation looking mostly comfortable, the unfavorable base effect and 7CPC HRA increases will pressurize headline inflation to inch up from November onwards. We see headline CPI inflation accelerating to 4%+ by December and remain around 4.3% average in 4QFY18. Core inflation is also likely to trend up to 4.5% in 2HFY18, as against 4.1% in 1HFY18. However, the overall average still looks benign at 3.3% and 4.3% for headline and core inflation respectively. This excludes states' 7CPC HRA implementation, which, when implemented, will push up headline inflation by around 85 bps on an average.

IIP growth rebounds in August

IIP growth accelerated sharply to 4.3% in August after 0.9% in July (Kotak: 3.37%), partly reflecting some payback in production as manufacturers begin adjusting to GST. Among the top positive contributors were 'meters', 'separators', 'digestive enzymes and antacids', etc. while top negative contributors were 'anti-malarial drug', 'gold jewelry', etc. Manufacturing sector increased 3.1%, owing to strong rebound in capital goods (5.4%) and consumer non-durables (6.9%). Mining growth was at 9.4% on the back of 15.3% coal production growth.

Rate-cut cycle seems to be over for now, but incoming data surprises remain key

Even as we see (1) CPI inflation averaging around 3.3% in FY2018 (including central 7CPC HRA) and (2) March 2018 inflation slightly below the upper end of RBI's 2HFY18 range of 4.2-4.6%, we reckon that directionally inflation will be trending higher. Core inflation, too, will likely stay sticky around 4.5% mark. With RBI fixated on the 4% target on a durable basis, and with plausible case of fiscal slippage, it looks less convincing for a policy easing in the near term, unless data surprises on the downside significantly. In this context, we will continue to monitor the evolution of (1) crop production, (2) downward surprise of core inflation owing to weaker-than-expected growth, (3) second-round impact of lower excise duty on petrol and diesel and (4) status of government's accounts.

Source: Equity Bulls

Click here to send ur comments or to

Other Headlines:

Put writers losing confidence: Angel Broking
Roller coaster ride for market, continue to remain cautious: Angel Broking
CPI inflation surprises on the upside as IIP remains tepid: Angel Broking
Comments on CPI numbers - Ms. Radhika Rao, India Economist, DBS Bank
India Transact Services welcomes RBI reducing MDR charges on debit cards
State polls may further give much decisive direction to the market: Epic Research
Don't get carried away by the momentum, use rallies to exit longs: Angel Broking
FIIs index futures 'Long Short Ratio' plunged to 56%: Angel Broking
Credit policy maintains status quo on repo rates: Angel Broking
Nifty to enter four-digit territory soon: Angel Broking
RBI Monetary Policy - Views of Mr. Surendra Hiranandani, CMD, House of Hiranandani
Views on RBI Monetary Policy from Kunal Shah, CFA, Fund Manager - Debt, Kotak Mahindra Life Insurance Limited
Comment on RBI Monetary Policy - Upasna Bhardwaj, Sr. Economist, Kotak Mahindra Bank
Market Outlook - Arpit Jain, AVP at Arihant Capital Markets
Market will take its cues from RBI monetary policy : Epic Research
Comments on GDP numbers by Ms. Radhika Rao, India Economist, DBS Bank
Volatility on cards: Angel Broking
2Q GDP indicates growth rebounding in the Economy: Angel Broking
Bank Nifty looks tentative around 25900 -26000: Angel Broking
Writing in 10400-10500 call options restricting upside: Angel Broking
10405 becomes a sturdy wall: Angel Broking
Weekly Market Quote by Sanjeev Zarbade, Vice-president - PCG Research at Kotak Securities
Contracting range indicates higher volatility in the expiry week: Angel Broking
10250 a key support, focus on stock centric moves: Angel Broking
Weekly market outlook - Arpit Jain, AVP at Arihant Capital Markets
Modi Proposes, Moody's accepts: Angel Broking
Divergence in two major indices creates some skepticism: Angel Broking
Investors should keep an eye on Bank loan growth : Epic Research
Finally snapped recent losing streak; but still just a breather: Angel Broking
No respite for the third session, next junction at 10000: Angel Broking
CPI inflation comes in higher than expected at 3.58%: Angel Broking
Stronger hands writing index puts: Angel Broking
Finally a new high for banking index: Angel Broking
Weekly Market Quote - Anita Gandhi - Whole Time Director at Arihant Capital Markets
Weekly Market Quote - Sanjeev Zarbade, Vice President - PCG Research at Kotak Securities
Numbers like IIP and WPI while results season will also affect stock specific : Epic Research
Rollovers above averages, avoid shorting: Angel Broking
Laggards (PSBs) turned into a gold: Angel Broking
Interest still remains outside the index: Angel Broking
No meaningful change in F&O date, wait and watch - Angel Broking
Giant stride from last SAMVAT, keep booking profits - Angel Broking Weekly Review Report
Continue with stock centric approach: Angel Broking
Economy: Yet another soft inflation print - Kotak
Weekly Market Outlook by Hemant Kanawala, Head - Equity - Kotak Life Insurance
9950 remains crucial support - Weekly Market Outlook - Arihant Capital Markets Ltd
D-street posted best weekly gains after almost 4 months : Epic Research
Is Investing in upcoming markets a good idea?
Call writers firmly holding their positions: Angel Broking
Index to remain in a range of 9800-10000: Angel Broking
9930 - 9880 holds a key support: Angel Broking

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2017