<p>One of the events that the market participants are looking forward to is the rate decision of the Monetary Policy Committee (MPC) of the RBI which is due on August 10. In the last two policy announcements, the MPC maintained a studied pause while making it amply clear that based on data if required it would go in for rate hikes. In fact, it seems like RBI has more or less arrived at a near-optimum growth-inflation trade-off at least for time being.</p>.<p>However, the challenges remain mainly from price stability angle. The prices of tomatoes, fruits and vegetables, etc, remain a concern. All this will be further compounded by a weaker Rupee as the currency is trading closer to Rs 83 against the US Dollar. The threat of inflation edging higher is an eventuality that cannot be easily ignored. The general expectation is that RBI will continue with the pause, and the current inflationary pressures may be viewed transient.</p>.India can become $6.7 trillion economy by 2031: S&P Global.<p>Apart from the MPC policy, there are other critical data which is going to hit the markets in the coming week. From the US it is the CPI and PPI data. This data would be helpful in gauging the direction of US inflation, and therefore of the future policy choices. It is expected that inflation may be quite sticky around the 3 per cent mark, well above the policy target rate of 2 per cent. The other interesting numbers which will be released would be the UK GDP data and German and Chinese inflation numbers.</p>.<p>What is more important at this juncture is the inflation in the services sector, which may take sometime for it to correct itself. The manufacturing and industrial segments are going through a contractionary phase and price gains may be more pronounced and easier to achieve in these areas. Therefore, a very interesting week ahead for markets and investors alike.</p>.<p>Last week, the market was inundated by the discussion on the consequences of the downgrade of the US rating by Fitch for a day or two. Though it created some confusion in the markets, at the end of the day the summary of the activities reflects that the markets more or less ignored the event. However, the markets will remain relatively more volatile, and may also see some profit booking as we move into mid-August.</p>.<p>The last week saw a pullback in the indexes from the all-time highs, though fundamentally nothing has undergone any significant changes. The buoyancy, earlier seen in the activity by overseas investors, has also slowed down in the first four days of this month resulting in some selling.</p>.<p><em>(The author is the head of research at Emkay Wealth Management)</em></p>
<p>One of the events that the market participants are looking forward to is the rate decision of the Monetary Policy Committee (MPC) of the RBI which is due on August 10. In the last two policy announcements, the MPC maintained a studied pause while making it amply clear that based on data if required it would go in for rate hikes. In fact, it seems like RBI has more or less arrived at a near-optimum growth-inflation trade-off at least for time being.</p>.<p>However, the challenges remain mainly from price stability angle. The prices of tomatoes, fruits and vegetables, etc, remain a concern. All this will be further compounded by a weaker Rupee as the currency is trading closer to Rs 83 against the US Dollar. The threat of inflation edging higher is an eventuality that cannot be easily ignored. The general expectation is that RBI will continue with the pause, and the current inflationary pressures may be viewed transient.</p>.India can become $6.7 trillion economy by 2031: S&P Global.<p>Apart from the MPC policy, there are other critical data which is going to hit the markets in the coming week. From the US it is the CPI and PPI data. This data would be helpful in gauging the direction of US inflation, and therefore of the future policy choices. It is expected that inflation may be quite sticky around the 3 per cent mark, well above the policy target rate of 2 per cent. The other interesting numbers which will be released would be the UK GDP data and German and Chinese inflation numbers.</p>.<p>What is more important at this juncture is the inflation in the services sector, which may take sometime for it to correct itself. The manufacturing and industrial segments are going through a contractionary phase and price gains may be more pronounced and easier to achieve in these areas. Therefore, a very interesting week ahead for markets and investors alike.</p>.<p>Last week, the market was inundated by the discussion on the consequences of the downgrade of the US rating by Fitch for a day or two. Though it created some confusion in the markets, at the end of the day the summary of the activities reflects that the markets more or less ignored the event. However, the markets will remain relatively more volatile, and may also see some profit booking as we move into mid-August.</p>.<p>The last week saw a pullback in the indexes from the all-time highs, though fundamentally nothing has undergone any significant changes. The buoyancy, earlier seen in the activity by overseas investors, has also slowed down in the first four days of this month resulting in some selling.</p>.<p><em>(The author is the head of research at Emkay Wealth Management)</em></p>