Govt capex may slow down as inflation rises
Markets may start factoring in political risks as election-related activity picks up with State elections in Nov and Lok Sabha elections in April 2024: Report
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New Delhi High inflation can be a political hot potato in an election year, forcing the government to slow down capex, says Amnish Aggarwal, the Head of Research at Prabhudas Lilladher. Nifty has given more than 14 per cent return in FY24 tear-to-date (YTD) as India attracted more than $16.5 billion of net FII flows.
India seems well poised for growth in longer term, however, coming months will be a real test for the economy and markets given EL Nino impact on crops and Inflation as food inflation has spiked to more than 7.4 per cent and rainfall outlook remains subdued and dim possibility of further cut in interest rates with some possibility of an increase in 2H, the report said.
“We expect markets to start factoring in political risks as election related activity picks up with state elections in November and Lok Sabha elections in April 2024”, the report said. Economy is getting a big push from Union government induced capex even as rural India is showing faint signs of recovery and urban discretionary demand remains tepid.
