RBI is again faced with the growth vs inflation puzzle, with CPI inflation moving past its threshold to hit a 16-month high of 4.62% even as Q2 GDP growth is projected to hit 4.5% after a six-year-low Q1 print of 5%. The FY20 GDP growth number is now being projected at a dismal 5 per cent or thereabouts. That should make the choice easier, as the price spike is attributed largely to a seasonal spike in vegetable prices. For now, FY20 inflation is projected at 3.5-3.7 per cent, as long as crude oil stays in the $65-70 range and a trade deal does not make it soar.
STREET PULSE: Where we stand Asian stocks clung to tight ranges on Thursday as investors awaited key Chinese data for clues on how much the 16-month trade war.
HERE'S WHAT TO WATCH  | SGX Nifty traded some 29 points higher at 7 am (IST), signalling possible upbeat start for Dalal Street. MSCI index for Asia-Pacific shares outside Japan fell 0.01%. Australian shares were up 0.12%, while Japan's Nikkei stock index fell 0.02%. |
| The Dow and S&P500 posted record closing highs on Wednesday helped by a big jump in Walt Disney shares. Dow rose 92 points to 27,783, the S&P500 gained 2.2 points to 3,094 while the Nasdaq dropped 3.99 points to 8,482. |
Oil prices rose, extending gains from the previous session, as an industry report showing a fall in US crude stockpiles last week. WTI crude gained 20 cents to $57.32 a barrel while Brent futures climbed 17 cents to $62.54.
Read More The rupee nosedived 62 paise on Wednesday to hit an over two-month low of 72.09 to the US dollaras poor macro data and lingering worries over US-China trade war weighed on sentiment.
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Fed No to Negative Rates... US Fed Chair Jerome Powell on Wednesday pushed back against a favourite talking point of President Donald Trump's, telling Congress that the negative interest rates sought by Trump aren't appropriate for an economy with ongoing growth, a strong labour market and steady inflation. He said the impact of three rate cuts this year are still to be fully felt in supporting household and business spending, and will let the central bank likely stop where it is unless there is a "material" change in the economic outlook.
Read More Infy Bold Face... Infosys has strongly refuted charges of disclosure lapses pertaining to a recent whistleblower complaint. Lawyers dealing with the company's legal strategy said the company followed all the required procedures as per its internal whistleblower policy.
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Inflation Worry... Retail inflation rose to a 16-month high in October and breached the RBI's medium-term target of 4% for the first time since July 2018 on higher food prices. The consumer price index rose to 4.62% in October from 3.99% in September as food inflation spiked on pricier vegetables. The sharp uptick dampened expectations of a big cut in interest rates by RBI in December, although most experts expect monetary easing to continue.
Read More Bond Mart Jittery… The median spread between India's benchmark government bond yield and the repurchase rate (repo) is now the widest in more than a year at 136 basis points, suggesting that the cost of borrowing may not reduce drastically despite Mint Road's persistent rate-easing. Concerns of fiscal slippage have prevented yields from coming down. While FPIs are pouring in money, but the bond market is not getting excited as traders are wary about the government's ability to meet its promised fiscal deficit target of 3.3%.
Read More Birla Red Flag on Voda-Idea... Aditya Birla Group will not infuse any fresh equity into Vodafone Idea, its telecom joint venture with Vodafone Group of the UK, and let it opt for insolvency if the government does not provide substantial relief, including on the telco's adjusted gross revenue (AGR)-based dues, which could be over Rs 39,000 crore, senior executives aware of the matter said. Vodafone Group CEO Nick Read had on Tuesday said without any government relief, the future of the India JV was in doubt.
Read More Meanwhile... The income-tax department has started questioning top companies and banks if they were passing on some of the common costs like salaries of chief executives to their branch offices. The department wants companies to proportionately distribute common costs from head office to branch offices and treat this as a supply. Once that is done, 10% of it has to be added to the cost and 18% GST levied on the total amount.
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