Rate Hike Fears Set to Test Nifty’s Rally as India Inflation Accelerates

Rate Hike Fears Set to Test India’s Stock Rally as Inflation Rises Good morning... I’m Pratigya Vajpayee in Mumbai, where the stock rally is about to face a test. India’s inflation accelerated to a two-year high in October and breached the top end of the Reserve Bank’s 2%-6% tolerance band, making a December rate hike look increasingly likely, as we explain below. Some of that may already have been priced in by the stock and bond markets, given that the RBI had already turned more hawkish and raised rates in October. Meanwhile, the benchmark Nifty 50 capped a third straight day of gains on Thursday to close at its highest level since Feb. 26. Foreign inflows into Indian stocks this month have now surpassed $7.5 billion, and BofA Global Research says the strong momentum may continue given a combination of improving earnings, cheaper valuations and light positioning. As for Friday, investors will be watching October trade data and earnings from companies including Tata Motors PV, Eicher Motors and Grasim Industries. Beyond local markets, Nvidia, the company at the heart of the AI boom, remains a big focus for investors globally. Chief Executive Officer Jensen Huang was ousted from his post after reports of three affairs, including one with a woman suspected of spying for China. Asian stocks have risen in early trading Friday, with investors easing back into technology shares. In today’s newsletter, we also write about: