Dear Reader,
The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.
October CPI inflation slumped to an unbelievable record low of 0.25 percent. Although driven by a sharp fall in food prices, there was moderation across segments of the economy, barring gold and silver that have witnessed a blinding rise.
The biggest relief is the downward trajectory in food prices, led by falling prices in fruits, vegetables and pulses. The more sticky core inflation edged up slightly from 4.3 percent in September to 4.4 percent in October. But if one were to exclude intoxicants, gold and silver, October’s core inflation at 2.54 percent was lower than 3.09 percent in the previous month!
In fact, most of the core inflation metrics reflect subdued consumer prices of goods -- the outcome of timely cut in goods and services tax (GST) that economists reckon offset the impact of US imposed punitive tariffs on Indian exports.
The upshot: the case for a 25 basis points (bps) interest rate cut in December gets more compelling. Adding to this optimism is that the high-frequency data for November show continued easing in the prices of pulses, vegetables and fruits.
To be sure, India has navigated its policy well through COVID woes, tariff tensions and supply chain disruptions across the globe. Mickey Doshi, Head of UBS India, at UBS India Summit today said India is the world’s fastest-growing major economy adding that growth will average 6.5 percent for the next 3-5 years. In fact, consensus on the Street forecasts a 7.2 percent Q2 FY26 GDP growth, following a stellar 7.8 percent in Q1 FY26.
The question is: If growth is well-entrenched and consumption is cruising ahead comfortably on the back of GST cuts, is a rate cut warranted in the Reserve Bank of India’s December policy meet?
Well, there is reason to believe that the second half of FY2026 would see growth slowing to below 7 percent, making it weaker than the first half. This is because the true impact of tariffs on India’s trade -- exports and imports - and its impact on domestic prices will unfold slowly. Besides, consumption is expected to normalise after the initial surge in demand following the reaction to GST cuts.
On another note, Manas Chakravarty explains why food deflation could also create new problems for policymakers and the central bank. Falling food prices could start to hurt farm incomes making today’s disinflation tomorrow’s policy headache. Whether the central bank pre-empts this with a December rate cut or, given the present comfort zone, defers the decision for later, remains to be seen.
Investing insights from our research team
Fujiyama Power Systems IPO: A power-packed growth story
Tata Motors CV: Buy, sell, or hold, post listing?
HAL: Order book provides clear long-term visibility
Ashok Leyland Q2 FY26 powers past the slow lane
Aptus Value: Sustainable, secure growth strengthens outlook, valuation
Cello World: Growth acceleration warrants rating upgrade
What else are we reading?
October CPI hits rock-bottom 0.25%: GST cuts shine, but food deflation rings alarm
Why India's stock lending mechanism remains a failed experiment
India’s Power Tightrope: Growth, vulnerabilities, and opportunity in IEA World Energy Outlook 2025
Chart of the Day | The growing case for InvITs in infrastructure financing
Why is an early, blanket trade deal with Australia important?
Multiple headwinds pose risk to ABB’s margin outlook
Does the K-shaped economy theory even make sense? (republished from the FT)
India demonstrates firm resolve: A chronology of how agencies cracked Delhi terror attack
India’s foreign policy has become merely a domestic performance
India’s tokenized rupee moment is here
Addressing the NEET challenge in India’s youth population
Breaking Through the Mid-Scale Barrier: Lessons from India’s consumer brands
Markets
Silver, Gold ETFs power up India’s passive fund AUM, but can the recent spurt sustain?
Tech and Startups
Technical Picks: PNBHOUSING, MUTHOOTFIN, NMDC, HEROMOTOCO
Vatsala Kamat
Moneycontrol Pro
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
