A big question worrying many is whether their savings can outlast inflation without altering their accustomed way of life. Another rate hike by the RBI looks imminent tomorrow; inflation increased more than estimated in May and March. Food prices are a supply-side issue but inflation seems to have become more generalised.
A hike in diesel and LPG prices will only add to the inflation menace. The positives from that move will be: lower oil subsidies and better Government finances. Right now there is no definite guidance on when the Centre will take that bold step.
For the day, we can happily expect a slightly positive start. US stocks rallied overnight. Wall Street rejoiced better-than-expected data on retail sales and inflation. European stocks also gained despite persistent anxiety over the Greek debt problem.
Asian markets are mixed. The Chinese market is down after its central bank hiked banks’ reserve ratio by 50 bps. The euro is slightly lower while crude oil has recovered. Gold has rebounded from a three-week low.
Large caps could remain muted. Beware of volatility in non-index shares. The Nifty is likely to remain rangebound as FIIs have once again turned net sellers and volumes are tepid.
