Inflation Worries Loom Large
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Editorial, Market Moves, Market Watch
Domestic headline equity indices Nifty 50 and Sensex ended the fortnight on a strong note, registering gains of 8.98 per cent and 9.50 per cent, respectively, on account of easing crude oil prices, improving global cues and only a 25 basis points hike in interest rates by the US Federal Reserve.
Domestic headline equity indices Nifty 50 and Sensex ended the fortnight on a strong note, registering gains of 8.98 per cent and 9.50 per cent, respectively, on account of easing crude oil prices, improving global cues and only a 25 basis points hike in interest rates by the US Federal Reserve. BSE Mid-Cap and Small-Cap indices climbed by ~7.80 per cent each, relatively lagging the broader markets. Japan’s Prime Minister Fumio Kishida and Prime Minister Narendra Modi recently held productive talks in New Delhi, during which both the leaders discussed ways to boost economic and cultural ties.
In a high-ticket move, PM Fumio Kishida announced an investment target of 5 trillion yen (₹ 3.2 lakh crore) in India over the next five years. The two sides have inked six agreements providing for the expansion of bilateral cooperation in a range of areas, besides firming up a separate clean energy partnership. The announcement follows the investment promotion partnership of 2014 when both countries had approved for Japan’s investment of 3.5 trillion yen from 2014 to 2019. On similar lines, Japan’s Suzuki Motor Corporation has disclosed its plans to invest 150 billion yen (₹ 10,440 crore) in ramping up production capacity for electric vehicles.
This will be alongside setting up an electric vehicle (EV) battery manufactur- ing plant and vehicle recycling unit in Gujarat. This is a radical step for Maruti Suzuki as it marks EV foray for the parent company’s Indian arm. The company had earlier scrapped plans to launch EVs in 2020 due to lack of infrastructure and government support. Meanwhile, BSE Realty, Auto and Bankex indices were among the top gain- ers during the fortnight, rallying 14.49 per cent, 11.16 per cent and 10.73 per cent, respectively. As per data released by the Ministry of Statistics and Programme Implementation, India’s retail inflation rate in February rose marginally to 6.07 per cent from 6.01 per cent in the previous month.
Retail inflation has risen to an eight- month high despite the unfavourable base effect wearing off, suggesting the presence of sequential price momentum. According to data released by the Ministry of Commerce, India’s inflation based on the Wholesale Price Index (WPI) rose to 13.11 per cent year-on- year in February. This is the eleventh consecutive month in which WPI has been in double digits. Wholesale inflation was driven higher by a greater rise in the prices of manufactured products in comparison to previous month.
High WPI inflation is seen as a harbinger of higher consumer prices as producers pass on rising costs to their customers. Over the fortnight, BSE FMCG index also managed to furnish decent returns of 8.82 per cent. Since Russia’s attack on Ukraine, prices of crude oil and a diverse range of other commodities such as wheat, palm oil and packaging materials have skyrocketed due to supply worries. In addition, India’s retail inflation has risen above the Reserve Bank of India’s upper-end target range of 2-6 per cent for the second straight month. This has pressured fast-moving consumer goods (FMCG) companies to consider fresh round of calibrated price hikes to neutralise the unprecedented rise in commodity prices.
India’s equity market managed to break into the world’s top five countries in terms of market capitalisation. For the first time, the market capitalisation of the Indian stock market eclipsed UK’s market capitalisation, becoming the fifth-largest stock market in the world
During the fortnight, India’s equity market managed to break into the world’s top five countries in terms of market capitalisation. For the first time, the market capitalisation of the Indian stock market eclipsed UK’s market capitalisation, becoming the fifth-largest stock market in the world. As per Bloomberg, the country’s total market capitalisation stood at USD 3.21 trillion, which is greater than that of the UK (USD 3.19 trillion), Saudi Arabia (USD 3.18 trillion) and Canada (USD 3.18 trillion). Trading data shows that during the fortnight FIIs were net sellers to the tune of ₹ 23,002.57 crore while DIIs were net buyers to the tune of ₹ 19,020.09 crore.
