Major Asian stock markets have opened the day on a negative note with stock markets in Japan and China are trading lower by 1.5% and 0.3% respectively. Benchmark indices in Europe and the US ended their previous session on a disappointing note stock markets in Germany and France ending the day lower by 1.8% and 1.9% respectively. The rupee is trading at 67.07 per US$.
Indian stock markets have opened the day on a flattish note. The BSE Sensex is trading marginally higher by 12 points (up 0.05%) and the NSE Nifty is trading higher by 5 points (up 0.06%).Further, BSE Mid Cap and BSE Small Cap are trading higher by 0.3% and 0.6% respectively.
Barring stocks from telecom and information technology sector, major sectoral indices have opened the day in the green. Stocks from fmcg and healthcare sectors are witnessing buying interest.
As per an article in Livemint, consumer price inflation (CPI) accelerated at the fastest pace in 21 months in the month of May. The CPI rose to 5.76% in May, from a revised 5.47% in April. The rise was mainly on account of an increase in the food prices.
Reportedly, food inflation rose sharply in May to 7.55% from 6.4% a month ago, with vegetable price inflation touching double digits at 10.77% against 4.82% in April. Further, prices of pulses and sugar too rose 31.57% and 14% respectively.
While, rising fuel costs too have led to an increase in the retail inflation. The price of the Indian basket of crude oil has gone up by more than 71% between February and mid-May. This in-turn leads to increase in the prices of the food items because of the logistics cost involved.
Further, drought has played its part too. Reservoir levels are down in many parts of the country. This has affected the sowing of crops, leading to lower production and higher prices of food items.
Rising inflation could potentially lead to RBI keeping a status quo on the interest rates or even increase them. All eyes are now on a normal rainfall to keep the inflation level in check.
In another news update, Latin America has overtaken Africa to become the largest market for vehicles shipped out of India. As much as a quarter of the vehicles were exported to Latin America.
Even though there is a huge logistics cost involved in shipping vehicles to Latin America, the highly cost effective manufacturing capabilities and government incentives are helping offset some of this impact.
Reportedly, some auto makers that weren't doing well in the domestic market were only too happy to utilize the opportunity offered by a market with profiles similar to India, as it allowed them to keep their factories running here.
Export of vehicle would help the vehicle manufacturers to improve their utilization levels and gain economies of scale.
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