See 70% probability of rate cut in Aug; headline inflation back to 4.5%: Sonal Varma

On the macroeconomic front it was mixed set of data as the May industrial production beat street expectations but growth slowed to 1.7 percent.

There was a sharp slowdown in retail inflation in June while the consumer price index (CPI) reading slipped to around 1.5 percent. To analyze the data in detail, inflation expectations and the rate cut trajectory CNBC-TV18 spoke to Sonal Varma, MD & Chief India Economist, Nomura Financial Advisory & Securities.

According to her, the market is already discounting a rate cut by the Reserve Bank of India (RBI) in its August policy, and the house also thinks there is 70 percent probability of rate cut in August. However, the RBI would cut only once and then to stay on hold, she thinks.

She also expects the headline inflation to get back to 4.5 percent.

For her entire analysis, watch video