After opening the day marginally lower, share markets in India have continued the downtrend and are trading marginally below the dotted line. Sectoral indices are trading on a mixed note with stocks in the oil & gas sector and stocks in the pharma sector trading in the green, while stocks in the IT sector are leading the losses.

The BSE Sensex is trading down by 106 points (down 0.4%), and the NSE Nifty is trading down by 28 points (down 0.3%). Meanwhile, the BSE Mid Cap index is trading up by 0.1%, while the BSE Small Cap index is trading up by 0.4%. The rupee is trading at 64.38 to the US$.

In news about the economy. According to data released by the Central Statistics Office (CSO), retail inflation as measured by the Consumer Price Index (CPI) rose to 3.8% in March, continuing its upward march, after snapping a four-month downtrend in February.

CPI picked up from 3.65% in February mirroring a revival in household spending after months of waning demand triggered by a notebandi induced cash crunch.

CPI inflation rose to a five-month high of 3.8% from 3.6% in November and inched closer to the pre-notebandi levels of 4.2% seen in September.

The data justified the Reserve Bank of India’s (RBI) caution on loose monetary stance. The RBI, which kept its key lending rate unchanged last week, has warned of a looming inflation threat over the next 6-12 months, leaving the door ajar for an interest rate hike in 2017-18.

A higher inflation rate, can indicate a pick-up demand and stronger economic activity, driven by higher spending on goods such as cars and greater discretionary expenses on eating out and recreation.

In March 2016, CPI-based retail inflation grew 4.8%.

CPI Inflation at 5-month high

Among the CPI components, inflation of food and beverages increased to 2.5% in March 2017 from 2.3% in February 2017 mainly contributing to the rise in CPI inflation. The inflation for housing rose marginally to 4.9%, while that for miscellaneous items was flat at 4.8% in March 2017.