India CPI

 Hello everyone !!

India CPI and WPI data release shows CPI easing to 6.77 % (prior 7.41%) and WPI easing to 8.39% ( prior 10.70%). The CPI release looks in line with RBI's delineated path with 6.50% print for Q3 but the Q4 prints could average 6.05% according to my estimates and inflation could ease below 5% from start of next fiscal year on higher base effects.  

We continue to be watchful of rise in cereal prices. Decline in paddy acreage due to unseasonal rains, elevated wheat prices alongside lower stocks government warehouses (50% less than last year) continue to pose risk to inflation outlook. Sowing for the rabi season has been encouraging which could bode well for the inflation trajectory to evolve along expected lines. 

Liquidity is in small surplus with liquidity absorption at Inr 66K crore and call rates trading closer to the repo rate at 5.90% and daily Cash tom points falling to 0.50 ps. Benign liquidity conditions and easing inflation favor the received position on OIS.

I'd like to take profit on the received OIS position around 6.35% on 5Y and 6.50% levels on the 1Y. 

18th Nov 22 - we take profit on our received position in OIS 5Y at 6.35% and on 1Y at market 6.62%