Mumbai Attacks

The deplorable Mumbai terror attacks of 13/7 reset the bar on India's war with terror, regaining old alert levels and adding geo political risk to the equation for a fragile recovery already under attack by inflation. It was a sorry commentary with attacks on Khao Gali(Opera House), Javeri Bazaar and the Dadar West blasts targeting office goers and using high end explosives incl Ammonium Nitrate. Markets opened today with trepidation and came back as India's preparedness and the intensity of the attacks seemed to not threaten the rest of the month.

Inflation in the sun

 The June WPI inflation at 9.44% was mostly driven by that very visible uptick in fuel at 12.85% and the rest with Primary Articles at 11.58% and Food at 8.3% (Week on Week) seemed very much out of the red zone. Infact the weekly inflation figures ticked down mostly including the fuel basket at 11.85% and Primary Articles at 11.58% and July and August have already been given a grren by most in house economists. April was revised upward to 9.7%. With our IIP at 5.6% in May and unlikely to rise too high in June, we have hit a plateau and there are a lot of good things on that growth plateau, not in the least our FMCG growth at more than 7%

PMI, IIP and FDI

India's PMI at 55 remains much healthier than that of China, UK, Australia and US with that in China and UK playing ith deceleration and degrowth in manufacturing bu thte 50% Services component keeping the yard organised and busy. the US and Indian economies continue to be in the middle of the growth moves and not ready tog o down very soon but unless our IIPs catch up the GD pfigures are going to continue ticking down. Fiscally our health is unbeatable with large ticket factors like the SBI rights issue and subsidies not as worrisome as thought and flexibly calendarised to avoid unnecessary pain

Our FDI story has ticked up in April and May a cool $5 bln added and rumors of FDI in media and retail strong. Pharma is now capped at 49% (not done yet) and banks may have got a similar cap spannered as MSCI reworked India's low weight to even lower for July onwards 

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