Inflation: You Need to Worry About Inflation: What The Past Crisis Tells Us

India’s stock index continued to fluctuate over the past week, but still moved well within that range. The distribution phase of the Benchmark Index has been taken over, especially despite the negative performance of the Asia Pack. HansenThe Chinese government’s actions struggled after raising regulatory concerns about sectors such as technology and private education. Private investors have become cautious and FII has offloaded more than Rs 6,900 in Indian stocks last week. July saw the highest sales since March 2020 as the market followed a rocky path with the highest ratings ever amid concerns about the third wave of Covid-19.One big horror is still imminent Daral Street and it is inflation!!

But is that really a huge concern? Looking at past crises such as the burst of the dot-com bubble in 2000 and the catastrophic global financial crisis of 2008, inflation ranged from 6 to 7%. Therefore, panic over the current inflation trajectory does not seem to yet be seen as a dangerous sign. There seems to be a little more room for it to rise before the RBI disrupts investor sentiment and raises interest rates. Moreover, even the Fed chair continues to emphasize that inflationary pressures are temporary, refraining from easing current interest rates.

Adding to this week’s Mr Market crack was a lack of trust from the IMF. As a result, India’s economic GDP forecast fell from 12.5% ​​to 9.5% in 2010, drawing attention to the slowdown and slowdown in economic recovery from the fierce second wave. -Inoculation drive more than expected. In the future, low rupees and high oil prices could be a short-term overhang for the market. However, market weakness should be seen as a buying opportunity for long-term investors as well as a sound correction, as low interest rates continue to benefit equities.

This week’s event

Several major banks and Shadow Bank have expressed concern about the growing stress on mortgages and CV loans. Unlike the first wave, where only the quality of assets in urban markets in these segments was hit, this time both rural and urban areas were affected, resulting in a surge in delinquency. This was exacerbated by the decline in EMI collection, as membership fees from these loans are generally collected door-to-door by collection agencies.

Difficulties are exacerbated because there is no market for regained vehicles and flooding such vehicles has minimal benefits for lenders. The surge in defaults is more harmful to certain lenders than others, but lenders are optimistic about the recovery of their collections in the second quarter. However, the scene could remain bad as the fear of the third wave grows.

Technical outlook

The Nifty50 Index continues to trade in a tight integration range. Key support and resistance are currently located at the 15,600 and 15,900 levels.Nevertheless Nifty Not breaking support, it is also trading below the trendline drawn from the April 2021 lows, which is a sign of bearishness. Traders are advised to maintain a neutral bias unless Nifty falls below 15,550. Below support, short-term fixes can be triggered.

Expectations for this week

RBI MPC The meeting is scheduled for next week. However, the RBI, like the Fed, is expected to continue to support affected sectors with cheaper credit without tinkering with repo rates. Governor’s comments on inflation will shed some light on the future actions that the economy and central banks may take. Car sales, PMI With the results of the earnings season, the numbers continue to drive D-Street’s stock-specific movements. Investors can continue to invest in the market in SIP format and accumulate high quality stocks. Nifty50 ended the week at 15,763, down 0.59%.