Deepali Bhargava, economist, Credit Suisse says it will be important to see how the unseasonal rains impact prices going ahead. She says the RBI may cut rates in June policy. But she expects a pause on rate cuts post June 2015.
The fact that food prices haven‘t risen in March despite unseasonal rains and large damage to crops in some pockets is further proof that the back of inflation is bent, if not broken.
The Reserve Bank of India is likely to hit the pause button in its policy review meet on April 7, but might go for a 25 basis points cut by June, says a report by DBS. According to the financial services firm, after surprise reduction in policy rates in March, no rate cut move is expected in the April 7 annual policy meet of the central bank.
The only thing that can be said is that when revisions are made, the government should make the new series of indices available for a long period so that analysts can compare what has really changed. And when CPI is changed, the WPI should simultaneously be changed.
India is grappling with falling rural demand aggravated by unseasonal rains that threaten to destroy what could have been a bumper crop year. Maharsahstra is the worst impacted state in the country and the compensation announced can barely cover the losses faced by the farmers.
The Wholesale Price Index (WPI) for January came in at negative 0.39 percent versus CNBC poll of 0.15 percent. The data shows a decline in core inflation but food prices have inched up. Experts discuss the possibilities of another round of rate cut.
HUL, Bharti, Tata Motors, ITC and Dr Reddy's Labs are top gainers while Sun Pharma, Hero, Axis Bank and ICICI Bank are losers.
Profit-booking may also be on the cards as benchmark indices Sensex and Nifty on Friday logged their fourth successive session of gains and regained 29,000 level and 8,800 mark respectively.
Inflation for January, as measured by a new methodology, has inched up to 5.11 percent year-on-year, compared to 4.28 percent (also on new methodology) in December.
The National Statistical Commission has suggested that the base year for computing national account should be revised every five years.
The sequential fall, driven substantially by the 7.8 percent fall in food prices, is important for four reasons. And it could lead to a situation of negative WPI anytime between March and September 2015 due to the base effect.
According to CARE Ratings, there would be a tendency for food price inflation to move upwards in January and February but overall WPI inflation would still be within acceptable limits.
Wholesale price index for the month of December rose a mild 0.11 percent year-on-year, compared to 0 percent in November. A CNBC-TV18 poll saw WPI at 0.3 percent.
Stocks in the US closed modestly lower, after a near 300-point rally on the Dow evaporated amid falling commodity prices
Singhania advises investors not to be worried about periodic corrections in the market, as the longer term story is still looking good
Inflation is being tamed, if not dead. We only need the confirmatory signals from December and January to know if it is going to lie low or rear its ugly head again.
Anup Bagchi of ICICI Securities feels the overall market trajectory is up with the macros improving, especially wholesale price index (WPI) coming in at zero.
As per the data released by government on Monday, food inflation fell by 0.39 percent month on month with vegetables contributing the maximum. Year on year the vegetable prices have fallen 30 percent. Manufacturing products inflation fell to 2.04 percent from 2.43 percent month-on-month.
According to the report, going forward, inflationary pressures in some items may increase due to slight improvement in demand. Moreover, waning of base effect might also lead to reversal of inflation rate.
Tanvee Gupta Jain of Macquarie Capital Securities says between January to March, CPI may be close to 6.5% range, because of easing of base effect. But it is still better than RBI's first target of 8 percent by January 2015, she adds
SBI is up 2 percent as its September quarter profit is in-line with estimates at Rs 3100 crore with stable asset quality.
While food inflation during the month hit its lowest level since January 2012, fuel inflation has been lowest since October 2009.
China kicks off the data release with inflation indicators for the month of October due on Monday, followed by fixed asset investment (FAI), retail sales and industrial output for the same month on Thursday.
CNBC-TV18‘s Latha Venkatesh spoke about the quality of India's macro-economic data with TCA Anant, Chief Statistician and Pranob Sen, Chairman, National Statistical Commission.
The CPI as well as the WPI points to lower inflation. But Reserve Bank governor Raghuram Rajan had pointed out that may be the case on account of a lower base. He may not make any commitment on inflation. Hence it will be very difficult to time the rate cut.