Moneycontrol Pro Panorama | Inflation up, growth down, what lies ahead?

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​India’s macroeconomic indicators are in pain.

Retail inflation in September increased to 7.4 percent over a year ago, its highest in five months. That it was driven by surging food inflation and has been above the Reserve Bank of India’s (RBI’s) 6 per cent tolerance level for nine consecutive months is worrisome.

The bigger disappointment was the 0.8 per cent year-on-year (yoy) decline in the index of industrial production (IIP), at a time when economists had pencilled in moderate growth in August. Surprisingly, this was led by a steep drop in consumer durables and non-durable goods production.

Both these numbers show that policymakers’ efforts seem to have had little effect, so far, in taming retail inflation, even as industrial growth falters. It also suggests that global gloom is beginning to cast a shadow on India’s economic recovery. The US Federal Reserve’s fast-paced rise in interest rates and the strong dollar index are leading to a global turmoil weighing on exports from India, besides fuelling rupee depreciation.

Even S&P Global Ratings recently flagged risks from global turbulence, with specific reference to falling foreign exchange reserves and rising current account deficits.

What lies ahead? Clearly, a rate hike in the December Monetary Policy Committee meeting is on the cards. Only expectations of the magnitude of hike vary, from 35-50 basis points (bps). Perhaps, September and October data will have a greater bearing on their decision.

Given festive cheer, will inflation continue to be high? Will slowing growth affect the MPC’s decision? Manas Chakravarty analyses how the situation might pan out, given prolonged inflation and slowing growth. Meanwhile, there is optimism among some economists, who reckon that lower input costs and resilience in services are positive elements that will support domestic demand.

As India wades through challenges in these uncertain times, there is a view emerging at the global level that US monetary tightening and dollar dominance is playing havoc with the world’s economies. Sashi Sivaramakrishna writes why that is making countries seek to de-dollarise the international economy.

Investing insights from our research team

Wipro Q2 FY23 – Why a deep correction in stock is not making us bullish

HCL Tech — Stellar show in Q2 FY23 amid widespread macro concerns

Delta Corp: The casino house continues to gain, attractive for long term

GM Breweries: Positive earnings outlook

What else are we reading?

Chart of the Day: Financial conditions are tightening, but not in Asia

Start-Up Street | Do investors in Indian start-ups prefer younger entrepreneurs?

Tata Motors should avoid Nano missteps to keep early lead in EV race

Fresh energiser to fulfil clean power dream

The world is starting to hate the Fed (republished from the FT)

Lex | NFTs: regulators go ape amid market downturn (republished from the FT)

Tharoor Vs Kharge | Congress’ intra-party democracy withers on the vine

Technical Picks: Infosys, Mindtree, Mindtree, USD-INR and KPIT Technologies (These are published every trading day before markets open and can be read on the app)

Vatsala KamatMoneycontrol Pro​