Consumer price index based inflation is critically remarked parameter to
assess the domestic economy in the current environment. Stock market and its two main segment nifty
and sensex react eye to eye to such changes.
Even Morgan Stanely has also endorsed the CPI might moderate to around 7
per cent by March from the present level of 10.9 per cent. The technical analyst and the best trading software keenly observe such kind of development in the market
which kicks off a sudden spurt in the nifty chart live and compels the intraday
traders to change their trading strategy. Giving the rationale behind such moderation,
it is presumed that factors like impact of slower government spending, slow
rural wage growth among others would help in reducing the consumer
inflation. Since last September, total
government spending has been on a decelerating trend. Moreover, the government has controlled
expenditure except interest and subsidy payments…. as the government delivers
fiscal consolidation, it will help contain aggregate demand –thus reducing
inflationary pressures. Moreover,
agricultural wages have shown signs of moderation, which will help in easing
inflation pressure. The moderation after
almost five years of acceleration, will also help to lower food production
costs and bring about a moderation in food and hence overall inflation. The other factors like slower rise in global
commodity prices like, oil, moderation in asset prices such as housing and
slower growth in domestic demand would also help in containing CPI
inflation. Furthermore, sharp slowdown
in domestic demand will finally start weighing on CPI inflation trend over the next
six months. In addition to it, high current
account deficit coupled with slowing growth concerns, the worst may be
behind. The commodity market
behaves accordingly and commodity tips provider seems to be well aware
of that.
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