Thursday, March 14, 2013

The Rising Inflation Phenomenon!

It is no big surprise for inflation to go high. India February inflation data well justifies the fact. The Feb WPI (main inflation indicator) went up to an annual 6.84 percent, which is higher by 0.30 percent of what analysts estimated. It was 6.62 percent in January. Non-food inflation slowed to 3.8 percent during the same period. February Inflation data report surged the otherwise falling India Stock market.

To add to this economic disadvantage is incessant weakness in economic activities. The situation has generated hopes amongst analysts about a possible rate cut by the RBI by at least 25 basis points in the meeting scheduled on Tuesday, March 19.

It was in January that the RBI had cut its key lending rate by 25 basis points after a gap of 9 months. A rate cut would only help handling the crisis. With the govt all geared up to reduce the country’s fiscal deficit, more RBI rate cuts are probable in the forthcoming months.

Nifty and Sensex showed improvement after the Feb WPI report came and the main contributors were banking stocks!

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