The deficit in rain fall is going make some people eat less as the ‘tur daal’ is up by 78pc and sugar is up by 45pc. Rice and Wheat also are costlier by 5pc and 7pc. This is causing inflation but of domestic variety.
The further dose of inflation would come due to. Higher metal prices which are up 35pc for Aluminium, 67pc for Copper, 81pc for Lead and 85pc for Nickel. The steel is trying to catch up and not before long will show similar price rise.
India’s stock markets would keep doing well till the inflation does not result in higher interest in equal proportion. The govt borrowing requirement of Rs 450000 crs is huge but the savings rate in system would easily absorb it. The earilier kind of dread on this account will be wrong as then the pressure of demand for funds was from all sides and supply from foreign sources was either restricted or was not liking to come to India. The scenario is quite changed. As for the control of global financial environment at macro level, the govt of India is too ill-equipped. The movement in foreign currency rates in future may or may not be helpful for India. When re-balancing of. World’s leading currencies will take place ( after the tinkering with the money supply by everyone), it will be sudden and without allowing time for taking a defencive stance by us. So, our policy planner should remain on the side of allowing growth and have lesser fears on other counts.
I may give you tip as to when be making investment with positivity in markets next time. This occassion will be there when you see at least five of the fifty stock make post 52 W highs on a single day. Many have posted 52 W highs in recent past but have slid back to make room for others.