X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
  • MyStocks

MEMBER'S LOGINX

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

Markets will remain closed on 19th & 20th October 2017.
We wish all our readers a very Happy Diwali!

Inflation could rise in the coming months
Fri, 11 Apr Pre-Open

Indian markets are abuzz with election mania and the likely positive outcome. However this party might not last longer. That's because agricultural output is seemingly in danger. And this could have a bearing on inflation all over again. Thanks to the recent hailstorms and the drought-like situation emerging on account of El Nino phenomenon.

The Australian Bureau of Meteorology said there was now a more than 70% chance that the unusual weather pattern will develop in the next few months. An El Nino increases the chances of poor monsoon in India although there have been several exceptions in the past.

We believe that predictions made by the weather department should be taken with a pinch of salt. What matters is what the government has been doing to reduce the dependence on monsoons for bolstering agricultural production. Has it been making sufficient investments in ramping up irrigation techniques, water harvesting etc? Are there enough storage facilities for food grains? The latter point becomes important because adequate storage of food grains during bumper years can be used in years plagued by inadequate rainfall. This helps to keep prices of food grains in check to a certain extent.

It seems that the answer to all these questions is no. The storage facilities for food grains in India are very poor. According to an article in Mint, around 40% of government's food grain is stored in an unprofessional way due to acute shortage of storage capacity to the tune of 35 m tonnes. Due to inadequate storage capacity and inefficient logistics, around 20-30% of total food grain harvest is wasted.

The Reserve Bank of India, in its latest credit policy has also warned that El Nino will have an impact on inflation due to rise in prices of agricultural commodities in case of monsoon failure. Thus India needs to have systems in place to tackle the problem of inflation caused by El Nino.

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

Equitymaster requests your view! Post a comment on "Inflation could rise in the coming months". Click here!

  

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS