Freezing temperatures in northern India can’t take the heat off policymakers in New Delhi as inflation shows no sign of cooling. Prices of essential food items continue to soar even as the non-food element of WPI starts turning costlier triggering expectations of some interest rate hikes later this month. Add to it the fact that the Government has now linked NREGA pay with inflation. This will not only require more funds but will also push wage inflation higher.
So, all the boastful predictions that inflation will soften to 5-6% by March-end may be just hot air.
Coming to the markets, India seems to be underperforming vis-à-vis the developed counterparts like the US and Europe. A multitude of factors have combined to put the bulls on the backfoot. The near-term prospects continue to look slightly dim. Patiently await the start of a fresh intermediate up-trend before making fresh investments.
