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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Good days are ahead

Posted by Muthu on October 15, 2014

The retail inflation has dropped to 6.46% in September, the lowest since India started computing Consumer Price Index (CPI) in January 2012.

Wholesale price inflation has fallen to 5-year low of 2.38%.

As I write this piece, Brent crude price is at $85 per barrel, the lowest since 2010.

If the inflation continues to fall in October as well, we may expect a rate cut from RBI in its December monetary review. As fuel prices are being reduced this month, the likelihood of inflation continuing to fall is high.

A rate cut would be a sentiment boost to the industry and would revive credit growth.

Globally many commodities prices are now at a multi-year low. As a country which imports commodities, it’s great news for us.

Lower commodity prices, lower inflation, lower interest rates etc. can give a huge boost to the development of our infrastructure. This would also result in growth of the economy and growth in earnings of the corporate India.

With favourable macro situation and a stable government, we might see some bold measures. Fiscal and current account deficit targets would be achievable. In this process, our ratings can go up in next few years.

So it looks like good days are ahead for our economy.

For you, as investors, this would mean good returns from both equities and debt.

Conservative investments like MIPs also would stand to benefit a lot.

I see a good time for next few years.

Stay the course and reap the benefits.

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