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Barring China, major Asian stock markets have opened the day on a positive note. The stock markets in Hong Kong and Indonesia are trading higher by 1.4% and 0.8% respectively. Benchmark indices in Europe ended their previous session on a positive note with stock markets in UK ending the day higher by 1.6%. The rupee is trading at 66.94 per US$.
Indian stock markets have opened the day on a positive note. The BSE Sensex is trading higher by 210 points (up 0.8%) and the NSE Nifty is trading higher by 66 points (up 0.8%). While BSE Mid Cap and BSE Small Cap are trading higher by 0.7% and 0.6% respectively.
As per an article in Livemint, India recorded 6% excess rainfall in the week to Wednesday. While, most regions barring southern peninsula will receive normal to above-normal in the coming week as stated by Indian Meteorological Department (IMD).
During the week to Wednesday, north-west and central India received 26% and 20% rains respectively above long period average (LPA). However, east and north east India saw a deficit of around 42%.
For the country as a whole, cumulative rainfall till Thursday is 2% excess than the LPA. So far, 85% of the country's area has recorded normal and excess rainfall, while 15% of the area has received deficient rainfall.
The news comes as a relief considering that the country has faced a deficit rainfall in the preceding two years. Eleven states declared a drought in the country after last year's failed rains which have also led to depleting water levels in reservoirs.
A normal monsoon will lead to higher disposable income in the hands of farmers, which in-turn will boost the rural consumption. To add to this, a normal monsoon will also help to keep the inflation at low levels. The possibility of a good monsoon would also increase the chances of the country's central bank retaining its easy money policy.
In another news update, there are concerns being raised pertaining to goods and service tax (GST) leading to higher inflation. However, many economists are of the opinion that GST would not lead to higher inflation provided the GST rate is at around 18%.
Historically, countries which opted for GST were faced with a scenario of high inflation. Whether that history will be repeated in India depends on a host of factors, the most important being the standard rate of GST finally agreed upon.
So going by the above issues, one can say that the inflation in India is here to stay. The real question comes as what can be the best bet to protect your wealth from these inflationary pressures?
For the common man, the inflation problem in India does not necessarily mean going back to gold. We will continue to weigh the potential returns from the Sensex versus the yellow metal. As far as stocks are concerned, one of our editions of The 5 Minute WrapUp explains how buying solid stocks can help in beating inflation.
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