Market Medley

  1. CPI Inflation for November 2024 Trends Higher at 5.5% The Consumer Price Index (CPI) inflation for November 2024 came in at 5.5%, marginally lower than market estimates of 5.6%. This decline was supported by the cooling of food and beverage prices. However, vegetable prices rose by 29.3% in November compared to a sharper increase of 42.2% in October .

 Amidst a challenging economic environment marked by slowing growth and elevated inflation, the Monetary Policy Committee (MPC) adopted a balanced approach by keeping policy rates and stance unchanged while easing banking liquidity through a 50 basis points (bps) cut in the Cash Reserve Ratio (CRR). Revised growth and inflation projections for FY25 stand at 6.6% and 4.8% , respectively, signaling a tilt towards supporting growth. With inflation expected to moderate close to 4% in FY26, a policy rate cut in February 2025 appears likely, especially if growth disappoints further.

  India's GDP growth in Q2FY25 stood at 5.4%, falling significantly below market expectations of 6.5% and the Reserve Bank of India’s (RBI) projection of 7.0%. The weaker-than-expected performance was primarily due to subdued industrial growth, which slowed sharply to 3.6% in Q2, compared to 8.3% in Q1 and a robust 13.6% in the same quarter last year.

  The Monetary Policy Committee (MPC) had shifted its stance to   neutral   in its October meeting, moving away from "withdrawal of accommodation" but maintaining a hawkish tone on inflation. Despite no indication of imminent rate cuts, the MPC projected confidence in growth while acknowledging that inflation remained above the 4% target. However, since then, significant global and domestic developments have created new possibilities for the upcoming MPC meeting this Friday.