Stagflation? November inflation print at 5.54 per cent underlined two things: RBI stands vindicated on its stand to hold rates. And now the price gauge looks headed towards the higher side of RBI's own range. At the same time, core inflation remains tepid, in fact, it trended lower at 3.5 per cent, suggesting that the much-awaited demand revival in the economy remains a far cry. This was also reflected in October IIP number, which remained negative amid festive holidays. The only solace is that the spike in inflation was caused largely by rising vegetable prices, which should cool off once the seasonal pressure subsides.
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded some 29 points higher at 7 am (IST), signalling positivity on Dalal Street. Elsewhere in Asia, shares jumped as a last-gasp Sino-US trade deal and a likely major election win by Britain's Conservative Party looked to have cleared a couple of dark clouds from the global horizon.
HERE'S WHAT TO WATCH  | Japan's Nikkei climbed 2.1% to a 14-month high, while South Korean stocks firmed 1.2%. MSCI's broadest index of Asia-Pacific shares outside Japan put on 0.5%. |
| Wall Street celebrated the trade news with record highs in overnigth trade. The Dow ended Thursday 0.79% higher, while the S&P500 gained 0.86% and the Nasdaq 0.73%. |
| Crude prices rose to the highest level in almost three months after President Trump signed off on a limited trade deal with China, improving the global demand outlook. Futures in New York added as much as 0.7% Friday after climbing by that amount Thursday. Crude is poised to eke out a small gain this week due to the positive sentiment around the trade deal after surging by more than 7% the week before |
| The rupee pared most of its early gains and settled marginally up at 70.83 against the US currency on Thursday due to forex outflows amid growth concerns and uncertainty over the imposition of higher US tariffs on Chinese goods. |
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Trump Signs Off Trade Deal Phase One... President Donald Trump has signed off on a phase-one trade deal with China, averting the Dec. 15 introduction of a new wave of US tariffs on about $160 billion of consumer goods from the Asian nation, according to people familiar with the matter. The deal presented to Trump by trade advisers on Thursday included a promise by the Chinese to buy more US agricultural goods. Officials also discussed possible reductions of existing duties on Chinese products. The terms have been agreed, but the legal text has not yet been finalised. A White House spokesperson declined to comment. A Reuters report said the US negotiators offered to reduce tariffs on about $375 billion in Chinese goods by 50% across the board, and suspend fresh tariffs to secure the deal.
Read More Golden Cross, Ahoy!... The Golden Cross pattern formation in emerging market equities for the second time this year may help Indian equities to continue their outperformance. A Golden Cross occurs when the short-term moving average crosses above the long-term average. It is perceived as a bullish technical pattern. In the latest Golden Cross, the 50-day moving average of the MSCI EM Index has reached 1,038 going above the 200-day moving average at 1,033. In March, the EM index had gained nearly 6% after forming a Golden Cross pattern before topping out. The Sensex and Nifty50 reported Golden Cross formations about a fortnight ago.
Read More NSE Back in IPO Queue ... NSE has revived its listing plans which were stalled due to litigation against the exchange in the colocation matter. The bourse has reached out to the Finance Ministry and Sebi, seeking their opinion about its plan to restart the IPO process and complete it sometime next year. The IPO plan of country's largest exchange has been on the backburner for almost three years following Sebi investigations against it and some top officials.
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Sebi Alert over FII Shortselling... Some of the foreign portfolio investors are believed to have indulged in shortselling stocks — selling shares which they don't have. Capital market regulator Sebi recently alerted custodians that it has come across instances where such trades have taken place. In an email to foreign and local custodians, which function as a vital link between offshore funds and the Indian stock market, Sebi has told them to adhere to the regulatory guidelines which bar FPIs from such shortselling in the Indian market.
Read More Double Whammy for Economy... Industrial production contracted for the third month in October with the festival season failing to provide any boost even as retail inflation quickened to a 40-month high in November — a double whammy for the struggling economy. The continuing decline in industrial production puts the onus of reviving growth on the government as RBI will likely keep monetary policy unchanged as inflation accelerates, experts said. However, they forecast some improvement in output in the months ahead. The IIP shrank 3.8% in October, the peak festival month this year, data released by the statistics office showed.
Read More Meanwhile... Telecom tariff floor may be coming soon. Regulator Trai says it may reconsider its decision not to regulate tariffs, following requests from all operators, although it would ideally prefer to keep away from intervening in price plans. "It is only recently that the telecom companies have together written to us that regulate us, so it's for the first time," Chairman RS Sharma said. The three private telcos have urged Trai to set a floor price for data to improve the health of the sector.
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