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Government Unable to Tackle Inflation – 9.72%

October 17, 2011

It is now evident from Inflation numbers that the Government is Unable to tackle the Inflation and the key question is does anybody in the Government is Concerned at all ? Indian Inflation in September – 2011 is at 9.72%. Going forward, we expect inflation to remain elevated at 9%+ for the next 2-3 months before coming off to 8% and nothing lower than that, unless the Government cleans itself and gets the WILL to serve the nation for which it has been elected and not Loot and Launder Money.

Non-Food Articles also moved to 14.8% from 17.8% the previous month. Mineral prices stayed firm at 24.8% vs. 23.4%YoY last month. FUEL INDEX: +14.1%YoY; and +0.8% MoM. Manufactured FOOD stayed firm at 8.0%YoY in Sept.

What is their For Equity Markets ?
For a strong performance of Equities, we all expect low inflation and high GDP growth. However, we are now in dilemma of slowing growth and elevated Inflation. Data proves that despite effective tightening to the tune of 500bps, inflation has averaged 9.6% for the last 20 months. In the same period, GDP growth has slowed from 9.4% to 7.7%. One can expect the markets to rise only when Industrial Growth resumes, Government plugs Corruption and then takes Policy decisions in the interest of the nation. Is 5% inflation a dream for Indians now ?

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