CPI numbers to be positive catalyst for markets - Ms. Radhika Rao, India Economist, DBS Bank

Today's numbers will be a positive catalyst for the markets in the near-term. Inflation has eased for the second consecutive month in February, raising downside risks to the RBI's projection for March 2018 quarter. Core inflation was relatively flat. This lowers pressure on the central bank to shift gears to a hawkish stance at the April review, with a similar tune likely to extend into June. FY19 numbers will largely be range bound between 4.5-5%, providing the headroom to keep rates on hold in 2018. Clarity will be sought on the MSP increases, oil price direction, market / rupee volatility and health of demand indicators.

Yields are likely to enjoy a short-term relief, helped also by RBI's liquidity injection to meet end-quarter / end-fiscal year squeeze.

Source : Equity Bulls

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