● Major rate hike cycle is behind:
In the recently concluded meeting, FED has hinted for slowing the
rate hike cycle as they believe inflation is peaking out. Even in Europe region, inflation is expected to
moderate from hereon. This has surely lifted sentiments globally as slowdown in rate hikes bodes well
for equity markets
Prices of major commodities have cooled off from its peak in recent times. Since India is a
net importer, significant part of inflation in India is also determined by the import and not only domestic
demand driven. With prices of various commodities cooling down, India’s inflation should also come
● India’s growth:
India’s real GDP growth of 6.3% yoy in November was broadly in line with expectations.
We continue to remain confident on India’s growth story; with recently signed free trade agreement
with Australia and UAE expected to aid in overall growth. Government thrust on infrastructure will
continue in our view.
As per the IMD, rainfall during the CY22 monsoon season (from 1st Jun’22 to 30th Sep’22)
stood at 925mm, 6% above normal rainfall levels. Reservoir levels also remains fairly strong. However,
erratic and disproportional rainfall distribution across India is expected to keep lower yield for major
crops resulting in higher food prices.
GST collection in November stood at Rs 1.46tn, gross GST collection has reported a surge of
11% on yoy basis. GST collection for 8MFY23 grew in mid-double digits on three year CAGR basis
as collection has been robust in recent months and running at a rate higher than the government
budgeted. Robust collection does provide room to government to cut down GST rate in case of demand
slowdown due to high inflation.