Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

What does negative WPI mean for India?
Thu, 19 Feb Pre-Open

The inflation data for the month of January is out. And it has taken many by surprise. This is because India has reported negative WPI in the month. Until few months back, there was a clamour for rate cut. But the central government with a sharp focus on inflation and stability, did not concede. Does the negative inflation justify a case for rate cut now? Along with rate cut, another issue that economists are worried about is if India has joined the league of countries that face deflation. The latter is a matter of concern as it could imply that consumers will postpone thei r buying and manufacturers will stop investing, expecting a decline in the price levels in the economy.

However, we believe that deflation scare is not for India, at least, not yet. Unlike regions like Japan that seem to be facing deflation since ever and where deflation seems to be a self inflicted issue, recent decline in price levels in India is mainly on account of fall in fuel and commodity prices, both external factors. As far as common man is concerned, food prices still remain high and as vulnerable to monsoons as they have been in the past. Basically, the reason for price fall is not a lack of demand. Hence, we do not believe that India will witness a real deflation in the future. Instead, current circumstances offer great opportunities for India to implement and formulate much needed reforms to ensure a stable recovery path from here.

As far as further interest rate cut is concerned, we believe that retail inflation, and not whole sale price inflation will be a deciding factor for the same.And as suggested in an article in Firspost, the picture that retail inflation paints seems different .What this could imply is inefficiencies at various stages of the value chain from manufacturing to consumption. A real and stable growth seems unlikely unless these inefficiencies are sorted. Reforms, and not rate cut, is clearly the solution.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary


What else is happening in the markets today? Dig in...

Equitymaster requests your view! Post a comment on "What does negative WPI mean for India?". Click here!

  

Views on News

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

Jun 1, 2020

Is too much data hurting your quest for market beating returns?

Quantum Mutual Fund: Hum woh nahi hain (The Honest Truth)

Apr 29, 2020

Ajit Dayal on how the mutual fund industry robs you of your wealth.

This One Trigger Could Turnaround Yes Bank's Stock Price (The 5 Minute Wrapup)

Oct 16, 2019

If Yes Bank manages to do this, it could be the start of a much-needed turnaround for the bank.

Gold could Hit 40,000 Sooner Than Expected (Profit Hunter)

Aug 16, 2019

Domestic gold prices are firing on both engines now. Gold prices could touch 40,000 faster than you could imagine.

More Views on News

Most Popular

It's the Beginning of a New Bull Phase in Smallcaps (Profit Hunter)

Feb 24, 2021

Last time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.

Make Rs 5,000 Per Day Trading the Market (Fast Profits Daily)

Feb 25, 2021

In this video, I'll show you how to get started on the path to daily trading profits.

I Believe the Investment of the Year Will Be...

Feb 19, 2021

In this episode, ace trader Brijesh Bhatia talks to us about the best investments of 2021, his profitable trading system, and much more.

The Hidden Tesla in My Great Indian Wealth Project (Profit Hunter)

Feb 23, 2021

An Indian company founded three decades ago in a garage caught my attention...

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS