Stocks that will save you if RBI hikes rates again

November CPI infaltion and WPI figures on Monday could decide the course of RBI's stance

The Reserve Bank of India's (RBI's) take on interest rates in its forthcoming monetary policy review on 18 December could change course depending on CPI inflation figures slated to come out later this evening and WPI figures to be released on Monday .

The consumer or retail price index-based inflation for November will be watched by market participants as it comes ahead of RBI monetary review next week. In October, expensive vegetable prices led by onions pushed consumer price index (CPI)-based inflation to double digits after a gap of six months. Better monsoons are expected to yield a bumper crop this financial year and thus food inflation which has the maximum weigthage in CPI inflation index is expected to come down.

This combined with wholesale price figures to be released on Monday are two important data sets that will help set expectations ahead of monetary policy review, say experts.

Street expects consumer prices to rise on an annualised rate of 10 per cent last month, a Reuters poll showed. It stood at 10.09 per cent clocked in October. A minor downtick won't make RBI reduce rates since Raghuram Rajan has already been pronounced an inflation hawk. So, is a rate hike in the offing?

Tackling inflation will be a key priority, RBI Governor Raghuram Rajan said on Wednesday, raising expectations that the central bank could raise interest rates for a third time in four months if prices remained high.

Ranak Merchant tells what stocks you should be buying right now to hedge against a probable dip if interest rates are hiked by RBI.

Markets are clearly in a consolidation mode. Is the trend likely to continue going ahead?
Ranak Merchant: A gap up, a new life high and a consolidation / correction thereafter, are a natural course of markets given the fact that the week after would be event heavy. IIp and Inflation data today with RBI and FED meets next week, markets are bound to trade in choppy terrain. The trend is likely to continue for the next week as well with supports placed in the zone of 6170-6250 levels.

SmartInvestor: Will you recommend a buy on dips strategy for Nifty. What are the key levels to watch out for on benchmarks?
Ranak Merchant: As mentioned 6170-6250 zone would act as support for Nifty. Rather than a buy on dips a wait and watch strategy would do well. Once the events are behind us a call could be taken on the next course of markets. Aggressive traders may use options to buy into the dips. Heavy leverage is best avoided on both sides.

SmartInvestor: What stocks are you accumulating to hedge against a probable dip if RBI hikes rates going ahead?

 

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