Equity benchmarks Sensex and Nifty halted their five-day rally on Tuesday and settled deep in the red, mirroring weak global markets, with decline in index heavyweights Reliance Industries, Infosys and HDFC Bank. Despite opening with gains of over 200 points, the 30-share Sensex turned highly volatile and tumbled 709.17 points or 1.26 per cent to close at 55,776.85. During the day, the benchmark index plunged 1,067.07 points or 1.88 per cent to 55,418.95. The broader NSE Nifty also declined 208.30 points or 1.23 per cent to close at 16,663.
Consumer-focused companies have been left with few options but to increase the prices of their products as input costs mount because of various factors, including supply chain disruptions. This has been affecting monthly household budgets. Prices of scores of items -- from spices to soaps to rice -- have increased in the past year.
The RBI cut the rate several times last year to reduce it by 125 basis points to the current 6.75 percent.
The Commerce and Industry Ministry will soon seek Cabinet nod to give out inflation data every month instead of the present practice of weekly release.
Food inflation has eased by nearly a percentage point to 17.28 per cent for the week ended January 2.
The Reserve Bank of India has painted a gloomy picture for the economy. A survey conducted by the central bank said India's gross domestic product (GDP) would grow 7.9 per cent this year against the earlier projection of 8.1 per cent.
There is no direct impact of the Russia-Ukraine crisis on India in terms of bilateral trade but a surge in oil prices poses considerable risk to the economy, an analyst report said on Friday. International oil prices which have surged past $100 per barrel "pose risks to external stability and currency movement," a Bank of Baroda Economics Research report said. Russia has launched military operations against Ukraine, stoking fears of significant disruption in the region, including loss of life. The West is ramping up financial sanctions against Russia and support for Ukraine.
Equity benchmark Sensex rallied 936 points on Monday, helped by heavy buying in banking and IT counters along with decline in oil prices amid hopes of headway in renewed diplomatic talks between Russia and Ukraine. A fresh round of talks is expected on Monday between Ukrainian and Russian officials. Rising for the fifth straight session, the BSE Sensex jumped 935.72 points or 1.68 per cent to settle at 56,486.02.
According to government estimates, in early December, potato prices had increased 136 per cent, sugar prices doubled and pulses zoomed by over 40 per cent compared to the previous year.
The price of export quality lady's finger, for example, shot up 150 per cent in two weeks to close on Thursday at Rs 40 a kg against Rs 16 a kg on September 16 in the Agricultural Produce Marketing Committee, Vashi, near Mumbai.
Asian Paints was the top loser in the Sensex pack, shedding 2.66 per cent, followed by Axis Bank, HUL, Wipro, M&M, HDFC and Bharti Airtel. On the other hand, TCS, Infosys, L&T, Tech Mahindra and HDFC Bank were among the gainers.
Inflation rose to 4.62 per cent during the week ended October 8 from 4.24 per cent a week ago, mainly due to hike in prices of essential food items and manufactured products.
No inflationary pressure in near future: Jalan
On the back of sound macroeconomic policies and softer commodity prices, India's growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures, said the Reserve Bank's annual report released on Tuesday. It, however, added that slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system could pose downside risks to growth. "On the back of sound macroeconomic policies, softer commodity prices, a robust financial sector, a healthy corporate sector, continued fiscal policy thrust on quality of government expenditure, and new growth opportunities stemming from global realignment of supply chains, India's growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures," it said.
Stock market barometers Sensex and Nifty ended marginally higher on Monday as rise in wholesale inflation capped early gains despite a positive trend in global markets. The 30-share index settled 32.02 points or 0.05 per cent higher at 60,718.71 with half of its constituents ending in green. The broad based Nifty edged up 6.70 points or 0.04 per cent to close at 18,109.45.
The industry department had planned to get 10,000 price quotations from producers in order to have a new-look WPI, which incorporates a better snapshot of the economy. Out of this, 8,000 products are manufactured items. However, it now emerges that the DIPP may get price quotations from only 6,400 industrial units and factories.
The WPI inflation stood at negative 2.4% in May 2015, compared with a negative 2.65% in April 2015.
The mismatch between industrialists' demand and account holders is because of inflation, Rajan said.
The common man's main grouse is high inflation numbers. But there are other anomalies as well that need to be addressed.
The government's response to the price hike needs to be less panicky. The imposition of export duties, reduction in import duties, increasing the minimum export prices, restricting exports and raising the cash reserve ratio for banks have been among the measures that have resulted from this concern over inflation.
From the 30-share pack, Infosys, Tech Mahindra, TCS, HDFC, HDFC Bank, Wipro and HCL Technologies were among the major laggards in early trade. Nifty tumbled 314.95 points to 17,160.70.
While rising food inflation is a matter of grave concern for a significant chunk of the population and for policy makers as well, it marks a turnaround in the fortunes of the farmer, reports Sanjeeb Mukherjee.
Brokerage firm Nomura said inflation levels in India are close to post global financial crisis lows, and also retained its positive stance on Sensex.
Bajaj Finserv was the top loser in the Sensex pack, shedding around 3 per cent, followed by Bajaj Auto, Bajaj Finance, L&T, Asian Paints, Dr Reddy's, ICICI Bank, HDFC Bank and RIL. NSE Nifty finished 101.45 points down at 14,929.50.
The rupee on Tuesday recovered from its all-time intra day low of 77.79 to close higher by 7 paise on a stellar rally in domestic stock markets. After opening lower at 77.67, the local unit plunged further to its all-time intra-day low of 77.79 due to a spike in crude oil prices and disappointing macroeconomic data. However, a strong rally in domestic equities helped the rupee rebound and close at 77.48 (provisional), showing net gains of 7 paise over the last close of 77.55. The forex market was closed on Monday on account of Buddha Purnima.
To cut interest rates, the central bank head has to open up a debate on inflation target revision.
Forex dealers said besides fresh demand from importers for the American unit, a lower opening in the domestic equity market as well as decline in industrial production growth to 4-month low of 0.5 per cent in July, put pressure on the rupee.
"Overheating is premature," Chidambaram told reporters on the sidelines of a United Bank of India programme in Kolkata.
Inflation targeting framework is now enshrined as a formal agreement by the government and the RBI; thus, it may seem that we are flogging a dead horse, says Soumya Kanti Ghosh.
The government's statistical system is being overhauled with painful slowness. The base years for the indices are too far back in time, the weights for different sub-sets are out of date, the methods of data collection are defective, and the statistical methods used simplistic.
Top gainers in the Sensex pack included ICICI Bank, Infosys, Bajaj Finance and HDFC Bank, rising up to 2.67 per cent.
More rate cut by RBI unlikely this fiscal, say Ind-Ra
The forecast has an error margin of four days, which is considered normal
The widely-tracked wholesale price index (WPI), the cause of severe political pangs for the government every Friday, will be released on a monthly basis by the end of this year instead of weekly. In effect, instead of witnessing the release of inflation data for 52 consecutive weeks, the data will be made available only a dozen times a year.
The 30-share Sensex ended down 245 points at 28,799 and the 50-share Nifty closed down 81 points at 8,750
As far as outcomes are concerned, the evidence on a soft landing, while not yet conclusive, shows movement in the right direction.
The government regulates prices of all other medicines.
CRISIL also expects the average Wholesale Price Index inflation to be higher at around 8 per cent as against of 7 per cent estimated earlier.
The marginal rise in June headline inflation to 4.9 per cent may be a precursor to a pronounced increase in the coming months and RBI is unlikely to cut rates at the forthcoming policy meet on July 30, say analysts.
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