Inflation at 11.63%; FM sees 13% in near-term

Impact on markets:

Amit Dalal of Amit Nalin Securities feels that there is definitely going to be more of a negative impact on interest rate sensitive stocks. “Companies that have gone into a mode of high capital employed capex programmes will have high cost of productions. Those sectors are real estate, auto, where we have to be very concerned,” he said.

 According to Dalal, if one looks at the volatility that has been seeing during the last ten days, it is obviously impossible for one to forecast how the market trend can be, in terms of looking at price of oil. “The fall in the market that has come in the last two weeks which is down to 3,000 points from where we were. It has taken into account the fact that earnings are going to be impacted by this high inflationary period ahead of us. Therefore, we are now discounting earnings at a much lower level for FY09 and even FY10. The positive lining in the cloud is that we have now completely differentiated our investment opportunities from investment laggards. There are certain sectors, which are dependent on borrowings like infrastructure, auto companies are dependent on consumer borrowings and these are going to be laggards for a long time to come,” Dalal added.