With the rupee depreciating to a new 32-month low against the US dollar, Finance Minister Pranab Mukherjee today said the Reserve Bank is "keeping an eye" on the situation."The RBI is keeping an eye on it (depreciation of rupee).They are watching the situation at the appropriate level," Mukherjee told reporters on the sidelines on the Vatsalya Mela 2011 here.His comments came a day after the Indian rupee plunged to a 32-month low below Rs 51 per US dollar on persisting demand for the US currency from banks and importers.At the Interbank Foreign Exchange, the domestic currency closed 44 paise lower at Rs 51.34/35 per dollar yesterday.The market was abuzz with speculation that the RBI has asked public sector banks to release dollars to arrest the fall of the rupee.Asked what would be a comfortable rate of exchange and the likelihood of intervention by the central bank, Mukherjee said: "I am not guessing anything and I am not finding what is comfortable level. I am depending on the advice of the RBI."The Indian rupee is the fourth most depreciated currency in the world and the most depreciated in the Asian continent.The RBI has attributed the movement to demand-supply factors and said it is happening globally.A weaker rupee is a matter of concern for India as it depends on imports for over 70 per cent of its oil and gas requirements and the depreciation of the local currency has made imports more expensive. .The depreciation of the rupee comes at a time when headline inflation has remained above the 9 per cent-mark for 11 consecutive months.Earlier this week, RBI Deputy Governor Subir Gokarn had said the apex bank will intervene in the foreign exchange market only to arrest volatility."We intervene when there is a very strong movement in a particular direction or extreme volatility and the objective is to smooth that volatility and not fix a rate," he had said.Gokarn had said the RBI would opt for open market operations to manage liquidity in the system only if there is stress and not to influence government bond yields.(PTI)
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The Reserve Bank on Tuesday announced 2 per cent interest subsidy on Rupee export credit to the labour-oriented and small scale sectors to cushion them from slowdown in the major markets like the US and Europe.Exporters of handicrafts, handlooms and carpets will be eligible for the interest subvention to be available upto March 31, 2012, the RBI said.The exporters in the small and medium enterprises across all the sectors would also be entitled for cheaper bank credit, subject to a minimum interest rate of 7 per cent.In a direction to the banks, the RBI said that the government has decided to extend the scheme from April 2011 to March 2012, for the four category of exporters."Banks may ensure to pass on the benefit completely to the eligible exporters," it said.The decision to help exporters was announced on a day when the high-level Board of Trade reviewed the situation arising out of renewed worries about the US economy and the debt crisis in Europe.The BoT, headed by Commerce and Industry Minister Anand Sharma and comprising well-known industrialists, discussed issues like currency volatility, availability of dollar credit and high cost of credit.Although India's exports grew by 54 per cent in April- August period, the time ahead is viewed as full of challenges."I am apprehensive about the roll-out of next seven months. I hope we should be able to achieve USD 280 billion exports this fiscal," Minister of State for Commerce and Industry Jyotiraditya Scindia said.Exporters' body FIEO welcomed the interest subsidy but wanted more. "We were expecting 3 per cent and also for sectors like textile, gems and jewellery and engineering," it said in a statement.(PTI)
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The red-tape in the country and lack of investment from the government has disappointed Ritesh Jain, Head Investment at Canara Robeco AMC, who feels all the past good work done by the government has lost its shine and with no developmental work happening in the past two years has pushed India back to being a third world country. Talking to Businessworld he feels pain is still left in the equity market and today is overweight on precious metal and fixed income. Though he feels this could be a good time for investors to build a good equity portfolio for a long-run and accumulate stocks of quality companies which otherwise they weren't able to pick in a bull-run.Excerpts from the conversation:What is your view on the current market? What is happening in the market across asset class? Till when do you see such a drag market condition and why?Markets do not like uncertainty and that is exactly what we are seeing in all asset classes. Sometime back it was uncertainty about US growth now it is about European solvency. I think there is still lot of pain left in market as the excess debt piled up in the last 10 years cannot be paid back so soon. We are in age of deleveraging where most asset classes will struggle to perform. I think pain will last for 2 more years basically till the end of 2013 to the beginning of 2014.Everyone feels the Reserve Bank of India (RBI) may not hike interest rates. What is your view? Do you think RBI may surprise or shock the market in the monetary policy on 16 December 2011? And why? Are we at the fag-end of rate hike by RBI and why?India is having a peculiar problem where supply is not able to catch up with demand. For creating supply you need supportive business environment. In absence of that the only way of keeping inflation low is curtailing demand and that is what RBI is doing by keeping interest rates high. We have reached at the end of rate hike because demand has started softening but supply side bottlenecks still exist. Inflation is becoming structural in nature and RBI is helpless at this point because any further interest rate increase will only hurt growth. Saying that I don't think RBI will raise rates in the forthcoming December monetary policy.What is your take on the 10-year G-Sec yields and why?I think 10 year bond will top out between 9.25 and 9.35 per cent levels unless fiscal deficit surpasses 5.5 per cent.In times of uncertainty where will you advice investors to invest?I am of the view the best way to approach investing at current levels is to have an allocation of 25 per cent in precious metals (gold), 50 per cent in fixed income fund (income funds) and another 25 per cent in equities (it should be diversified equity with large cap bias). This is not a static allocation. As bond yield come down investor should switch profit of fixed income into equities.Fixed income, particularly FDs and bonds have become a flavour among investors, even equity fund managers. In your view has fixed income become a cushion for equity investors?When the interest rates are so high, fixed income (FD) do provide a lot of cushion.Currently where are you investing your money? And why? Are you a fan of equity at this juncture?Most of my own investments are into precious metals (gold, silver and gold mining companies) because I believe in uncertain times like today precious metals will provide lot of safety. I approach investing in equity only through SIP (systematic investment plan) route because that is the best way of creating wealth in equity markets.As a fund manager how are you managing the money in your portfolio and where are you investing in this market?I manage three asset classes, equity, fixed income and gold. In equity we are overweight consumption because we believe that the India consumption story has still a long way to go. In fixed income, either we are invested in cash or near cash or long-term bonds because we believe we are near the top in 10 year yields. In Indigo fund where we invest in gold ETF, we are overweight gold allocation because we believe gold prices are set to rise sharply over next 3-4 years.What is your take on the 1 year, 2 years, 3 years, 5 years and 10-years yields in corporate bonds? Will you be a buyer in corporate bonds and what would be the tenure?We are overweight 10 year corporate bonds because we believe that corporate balance sheets are in much better condition than government balance sheet. Hence the spread between these two should come down.It's been seen that the market is favouring CDs than corporate bond. Why is that?When the short term rates are equal to long term rates then people tend to go for short dated CDs (Certificate of Deposits). In different funds we are buying based on investment mandate either 1 year CDs for carry purpose or long term bond for capital gains.
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The Indian rupee fell by 12 paise to Rs 51.32 per US dollar in early trade on Monday, weighed down by gains posted by the US dollar against other Asian peers overseas amid a weak trend in the domestic equity market.Rupee had closed 26 paise higher at a fresh two-week high of Rs 51.20/21 per US dollar on the Interbank Foreign Exchange in the previous session on Friday amid a rally in the stock market and dollar-selling by exporters and some corporates. But weakness of other Asian currencies against the dollar overseas and a lower opening in the domestic stock market put pressure on the rupee in early trade .India may face its worst financial crisis in decades if it fails to stem a slide in the rupee, leaving the Reserve Bank of India (RBI) with a difficult choice over how to make best use of its limited reserves to maintain the confidence of foreign investors.If the RBI is too timid, it risks adding fuel to the ire of portfolio investors, which India relies on heavily to cover its imports tab.However, on Monday a senior government source with direct knowledge of the matter told Reuters that India is not planning to impose any capital controls to check the rupee's slide.Over the weekend, Subir Gokarn, a deputy governor at the Reserve Bank of India, had said the central bank would use all available tools including "strategic capital controls" to stem a fall in the rupee if the currency's downward spiral accelerates, the text of his speech posted on the bank's website showed.The Economic Times, citing unnamed sources, on Monday had reported that New Delhi was considering restrictions to check forex outflows.Aggressive intervention would leave the central bank open to criticism that it is wasting precious money on problems that are beyond India's control anyhow, noteably Europe's debt crisis.It was only last July, in a nod to the country's growing economic clout, the rupee was given its own symbol to sit alongside the recognised international monetary heavyweights the $, the £, the €, and the ¥. However,18 months on, India's rupee is not so much a symbol of pride as a source of embarrassment, having plunged against all major currencies and staggering to a record low against the US dollar.Unlike most of its Asian peers, India has recently been running large current account and fiscal deficits. That means it must attract sufficient foreign money -- namely US dollars -- to close the gap, and a weaker home currency makes that costlier.This is a perennial problem for India. The current situation is so worrisome because India is grappling with big internal and external economic threats simultaneously. Growth is slowing. Inflation remains high. Political paralysis has stymied domestic reforms.Reserve Bank deputy governor Subir Gokarn, however said in December 3 that the continued and steep fall of the rupee will not have an impact on the central bank's year-end inflation guidance. "Our projection suggests that the rupee fall will not change the anticipated downward trajectory of inflation," Gokarn said in a video address at a CFO event organised by the industry body CII.The RBI, the last line of defence against a currency meltdown, has cautiously begun to support the rupee, but its firepower may be more limited than its $300 billion in reserves would suggest.Beyond India's borders, Europe is the biggest worry. As its banks deleverage, investment money has flooded out of India's markets. If Europe's debt troubles deteriorate, India could be hit with a balance of payments crisis as severe as the one that forced a sharp devaluation in 1991.The rupee, which has dropped 16 per cent in the past four months, got a reprieve last week after the world's big six central banks banded together to try to ease dollar funding strains, helping it to snap a four-week losing trend.But analysts widely expect the rupee, trading on Monday at 51.26 per dollar, to resume its slide."The Indian currency will be the first casualty of a deterioration in the euro zone crisis," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.If Europe's crisis deepens, India's trade deficit would widen even more rapidly, and it would have even more trouble attracting foreign capital."Risk appetite will obviously collapse and gradually the currency crisis is likely to take the shape of a balance of payments crisis," Nitsure said.Worries about India have spiked in tandem with concern over Europe. UBS hosted a client conference call about India on November 29, which it announced with an email headlined "India explodes." Deutsche Bank sent out a report on November 24 entitled, "India's time of reckoning.""Suddenly everything seems to be coming to a head in India," UBS wrote. "Growth is disappearing, the rupee is in disarray, and inflation is stuck at near-record levels. Investor sentiment has gone from cautious to outright scared."India's current account deficit swelled to $14.1 billion in its fiscal first quarter, nearly triple the previous quarter's tally. The full-year gap is expected to be around $54 billion.Its fiscal deficit hit $58.7 billion in the April-to-October period. The government in February projected a deficit equal to 4.6 percent of gross domestic product for the fiscal year ending in March 2012, although the finance minister said on Friday that it would be difficult to hit that target.India relies heavily on portfolio inflows -- foreign purchases of shares and bonds -- as a means of covering its current account gap. Those flows are fickle.Foreign portfolio investors have sold a net $50 million worth of equities so far in 2011 , in sharp contrast to the $29 billion they invested in 2010, data from the Securities and Exchange Board of India's website showed. In November alone, foreign funds pulled $661 million out of Indian stocks."The Indian economy is one of the most vulnerable to liquidity shocks in the region, not helped the least by deficits in its key balances," said Radhika Rao, an economist with Forecast PTE in Singapore.Where Is The RBI?The drop in portfolio inflows and the hefty current account and fiscal deficits have been a key factor behind the rupee's decline.The RBI appears to have intervened in mid-November to try to slow the decline. Between October 28 and November 25, reserves dropped by $16 billion to $304 billion, yet the currency still fell by 7 percent over that period.Trading in rupee offshore forward contracts show traders are betting on the rupee declining a further 1.7 percent over the next three months, and 4.5 percent in a year.Many economists argue the RBI has been too timid, and deserves part of the blame for the rupee's weakness.A deputy governor said on Saturday that the central bank would use "all available instruments" to stem a downward spiral.Other officials have insisted the RBI should avoid "undue" intervention, especially when the currency depreciation is caused by external forces, a message economist Rajeev Malik says could backfire."The biggest mistake RBI has made is that it has almost given an open invitation to speculators to short the rupee," said Malik, who is with CLSA in Singapore."It is really bizarre for any central bank to openly keep on saying that it will not intervene when there is already pressure on the currency to weaken and globally things are so uncertain."Keeping Powder DryIf the RBI decides to step in more aggressively, its manoeuvring room is more limited than its reserves tally would suggest.After covering the current account deficit, short-term debt and foreign investment flows, there would be less than $20 billion left over.J. Moses Harding, head of market and economic research at Indusind Bank in Mumbai, said the RBI's immediate concern would be arresting the spread of currency woes into the money market.India's banking system already borrows more than $19 billion from the central bank to meet reserve requirements, so if the RBI moved to prop up the rupee, it would drain more liquidity out of an already tight market.Companies make quarterly advance tax payments around mid-December, which puts an added strain on liquidity.In addition, a glut of foreign currency convertible bonds, issued when the rupee was much higher, falls due in the first quarter. They include a $1 billion Reliance Communications bond.The bonds are too expensive at current levels to be converted into stock and the sharp depreciation of the rupee will leave issuers with a heavy redemption bill.The central bank could boost liquidity by cutting the cash reserve ratio, the proportion of deposits banks must set aside with the central bank as cash. Talk of a cut has circulated in Indian markets in recent days, although some economists argue that such a move could stoke already hot inflation."It would be extremely difficult for RBI and the government to arrest simultaneous downward pressures from equity, currency and money markets while struggling to address low growth and high inflation issues," Harding said.That argues in favor of RBI keeping its ammunition dry in case conditions worsen. If India is indeed heading for a 1991-style balance of payments crisis, those reserves would be vital.Back then, India rapidly depleted its reserves, forcing a currency devaluation.But the risk is that RBI will wait too long to act."While it is important for RBI to not shed its FX reserves unnecessarily, the approach of allowing such a massive pace of slide in the rupee could backfire," CLSA's Malik said.(BW Online Bureau with Reuters)
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It was a perfect pitch for the Indian equity market to set its comeback. First there was the oversold position by marketmen in the domestic market. Second, the flow of positive news like food inflation in India falling from double digit to 8 per cent, optimism that European officials are taking action to alleviate the debt crisis and provide cheaper dollar funding to European banks, expectation that the Reserve Bank of India may cut rates in its forthcoming monetary policy on 16 December 2011 and developmental reforms initiated by the Indian government proposing 51 per cent foreign direct investment (FDI) in multi-brand retail helped the Indian equity market end the week with a gain of over 7 per cent. Though the market made a strong comeback, it doesn't seem that it would be able to sustain at upper levels as the undercurrent still remains weak and the uncertainty over a range of issues in the domestic as well as global markets is likely to keep the market fragile. The outcome of the EU Summit could prove crucial. On 9 December, German and French leaders will present plans to better integrate Euro-zone. This week, the market will also keep an eye on the US job claims data and domestically on the inflation numbers. The market may also witness a jolt if the government is unable to push its reform process, particularly the FDI in multi-brand retail. It's a test for the Congress-led UPA government which is facing a lot of opposition from even its ally members. Despite most of the negatives being discounted in the price, experts don't think the rally could sustain. Says Gurunath Mudlapur, managing director at Atherstone Capital Markets, "Indian equity markets are in a bearish sentiment in a by and large bullish market. There are India specific macro-issues like rising interest rates, drying up of fresh large FDI and FII investments, high inflation and rising current account deficits. Once these macro India specific issues are adjusted, equity markets can see an upmove, until then it will be a volatile Indian market." Meanwhile, the Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) after falling for four consecutive week rallied last week to close at 16,846.83, recording a weekly gain of 7.33 per cent, its highest weekly gain since 17 July 2009. This is the third time since September 2011 the Sensex has bounced back after touching a new low below the 16,000 mark. This time the Sensex bounced back after touching a low of 15,478.69 on 23 November 2011. The Sensex has been hovering between 15,800 and 17,900 levels. Initially it fell from a high of 17,211.80 on 9 September 2011, to touch a low of 15,745.43 on 4 October 2011; thereafter a buying spree at lower levels witnessed a vertical surge in the Sensex to touch a high of 17,908.13 on 28 October 2011. Every time Sensex touches a new lows, it also manages to recover quickly and attain new highs on tthe rebound. It has been the FII flows that did the trick and pushed the Sensex above 16,000 last week. For the week, FIIs were net buyers in the tune of Rs 695 crore. For quite sometime now the Sensex is doing a see-saw following the uncertainty over the Euro-zone crisis and lack of trigger in the domestic market. It's not a runaway market as uncertainties surrounding the market aren't going away anywhere soon. Though liquidity easing in the Euro-zone and US may see some money coming to emerging market like India in the coming months, it will only be the developmental reform that will help our markets move upwards and that today seems to be in a limbo. In such a scenario investors will be better-off to stay on sidelines, as market could correct after last week's sharp recovery. Bear markets are the best time to build a portfolio and for investors this is the opportune time to pick ones desired blue-chip stocks that they may have missed in the previous bull-run.
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As the rupee depreciated to a new 32-month low against the US dollar, Finance Minister Pranab Mukherjee said on Wednesday the Reserve Bank is monitoring the situation and will intervene in the forex market "as and when necessary"."As RBI has already mentioned, it is watching the situation. As and when it is necessary, they will intervene" Mukherjee told reporters on the sidelines of CAG event.His comments came a day after the apex bank said that it will intervene in the foreign exchange market only to arrest volatility."We intervene when there is a very strong movement in a particular direction or extreme volatility and the objective is to smooth that volatility and not fix a rate," RBI Deputy Governor Subir Gokarn had told reporters on the sidelines of a banking event on Tuesday."The RBI does not target yields. Our objective is to manage liquidity. If we find there is stress on liquidity, we would take action to ease the stress...not with direct objective to target bond yields," Subir Gokarn told reporters on the sidelines of a banking event.The Indian rupee fell by 24 paise to a fresh 32-month low of Rs 50.91 against the US dollar in early trade today amid depreciation of the euro due to the deepening debt crisis in the euro-zone nations.The Indian rupee is the fourth most depreciated currency in the world and most depreciated in the Asian continent.RBI has attributed the movement to the demand-supply factor, and said it is happening globally.Gokarn had said that RBI would opt for open market operations to manage liquidity in the system only if there is a stress and not to influence government bond yields.A weaker rupee is a matter of concern for India as it depends on imports for over 70 per cent of its oil and gas requirements and the depreciation in the local currency have made imports expensive.This has come at a time when headline inflation has remained above the 9 per cent mark for 11 consecutive months.(Agencies)
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After conceding hard days are ahead, Finance Minister Pranab Mukherjee confirmed a slowdown, on Friday when he said economic growth will moderate to about 7.5 per cent in the current fiscal, lower than the 9 per cent projected earlier. Chief economic adviser to the finance ministry, Kaushik Basu, on the other hand, was confident that the slowing economy is likely to pick up in the January-March quarter, but said a slowdown in investment will have some impact over the next year."I am confident that we will be covering some of the losses in our growth momentum and may end the year with over 7.5 per cent," said Pranab Mukherjee while addressing the Hindustan Times Leadership Summit in New Delhi on Friday.GDP growth in 2010-11 stood at 8.5 per cent.The economy expanded at the slowest pace in two years at 6.9 per cent in the July-September quarter of the current fiscal. For the first half (April-September) of the fiscal, the average growth rate stood at 7.3 per cent.GDP growth in the second quarter of the fiscal slowed to 6.9 per cent from 8.4 per cent in the corresponding period last year, mainly on account of rising interest rates and the uncertain global scenario.Asia's third-largest economy grew at 6.9 per cent in the quarter to end-September, much slower than 7.7 per cent growth in the previous quarter, data showed on Wednesday.Some policymakers, of late, have begun to concede economic growth for the fiscal year ending March 2012 could to be as low as 7 per cent compared with the budgeted estimate of 9 per cent.The RBI has already cut its growth projection for the current fiscal year to 7.6 per cent from 8 per cent.Slowing growth in fact has become a global phenomenon with more and more global bodies declaring an imminent recession. The global economic recovery is running out of steam, leaving the euro zone stuck in a mild recession and the United States at risk of following suit, the OECD said last Monday, sharply cutting its forecasts for the global economy to 3.4 per cent for 2012, the United Nations has warned that the world is on the brink of another recession, projecting that global economic growth will slow down further in 2012 and even emerging powerhouses like India and China, which led the recovery last time, will get bogged down.A ClimbdownThe tight monetary policy employed by the RBI to tame inflation affected the performance of manufacturing and other infrastructure sectors, with the eight core industries recording only 0.1 per cent growth in October, the lowest in the last five years.In the Budget for 2011-12 fiscal, Mukherjee had projected a GDP growth rate of 9 per cent plus/minus 0.25 per cent."My growth projection was on the basis of achievements which we have immediately after the international financial crisis of 2008," he said, adding, "I am modest. I have not said that I will be reaching the figure I projected in the Budget.""We can not expect we can reach a high growth rate of 9 per cent overnight. We will have to live with relatively moderate growth this year. Next year, we will try to improve the growth rate higher. This year, growth could be 1 per cent down. We should focus on the strategy of domestic demand-driven growth," he said.Mukherjee said considering the current global context and slowdown in the domestic industrial sector, "The growth performance is not at all disappointing."Earlier this week, Mukherjee had said the Indian economy is battling both global and national problems and this is getting reflected in the growth numbers."We have been confronting the challenge posed by inflation in the past two years. Sustained high economic growth has led to improvements in purchasing power in both rural and urban areas," Mukherjee said.Overall inflation has been above the 9 per cent-mark since December, 2010. It stood at 9.73 per cent in October. Food inflation, which accounts for 15% of overall inflation, fell to 8 per cent for the week ending 19 November after remaining elevated for four months.He said the rise in purchasing power has accentuated demand-supply imbalances in some specific commodities, like vegetables, fruits and protein-rich items."In addressing this issue, we have taken both short-term fiscal and administrative measures and also medium-term steps to improve supply response," Mukherjee said.He said in the short and medium-term, the country should emphasize on domestic demand-driven growth to ward off the adverse impact of the global crisis and improved productivity in agriculture is necessary to meet the objective of inclusive growth."We have already began the process of fiscal consolidation. Though it may appears extremely difficult, I am hopeful of fiscal balance targeted for the current financial year. The state governments also need to work toward fiscal sustainability," Mukherjee said.
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With most of the bad news getting discounted, the Indian market continues to remain in a deer phase – neither bearish nor bullish, rather flat. Over the past one month, the sensex has moved in a narrow range with spurts of volatility on news from the US and Euro-zone as well as home inflation and IIP numbers.Last week the market drifted lower, losing 2 per cent on lower than expected IIP numbers and on continued concerns on Europe with Italy being the new focus area. On the other hand, late on Friday, the US market climbed on hopes that Greece and Italy are moving in the right direction and leaders in both nations are taking the right measures to curb the regions ongoing debt crisis. This saw the Dow Jones Industrial Average Index (Dow) gain 2.2 per cent on Friday helping the Dow to end the week higher at 1.4 per cent.Says Amar Ambani, head of research at India Infoline, "In the coming week, monthly inflation figures would play an important role in setting the direction. It would be advisable to stay stock specific." Though next week the focus for the market will be on Euro-zone and the WPI inflation data for October, players will slowly build-up position ahead of the winter session of Parliament that starts on 22 November 2011. Players expect government to announce some reform measures to boost investments in the country.Last week, the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) drifted lower on poor IIP numbers. The IIP for September came at 1.9 per cent, much below market estimates of 3.6 per cent. On a year-on-year basis, the mining and capital goods index reported a contraction of nearly 6 per cent and 7 per cent, respectively, whereas manufacturing grew by 2.1 per cent. The weak IIP data reflects the impact of the monetary tightening measures adopted in the past. It is the second consecutive week that the Sensex has ended in red. For the week ending 11 November 2011, the Sensexed end at 17,192.82, down 2.1 per cent or 369.79 points. Since 28 October 2011, the Sensex has lost 612 points.The government spending has come to a standstill which is clearly visible from the economic and industrial data. This has put serious concern over the growth of the country. Already the National Council of Applied Economic Research (NCAER) has reduced its projected average GDP growth for the current fiscal to 7.9 per cent, down from 8.3 per cent in April 2011. If markets have s to move up sustainably, progress on reforms and investments is a pre-requisite and any positive news on that front will be the next big trigger for the Indian market.Though no bad news from Europe can be good news, it will not act as a trigger for our markets. The European crisis is not going anywhere in a hurry. Many of the nations are facing depression though not recession. Fiscal challenges will be solved eventually, but the underlying fear of banking sector contagion will continue to pose threats. A lot of work needs to be done as it's a structural problem that will require multi-year of restructuring.At home, the government stand is clear that it wants to contain inflation that is hovering close to 10 per cent and food inflation close to 12 per cent. But if India has to move to a new level of growth, it will require renewing the momentum of reforms and will have to find other measures to capture inflation. Slowing growth and rising inflation will be double whammy.In such circumstances investors will be better off accumulating stocks of quality companies which otherwise they weren't able to pick in a bull-run.
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