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MOSL: MOrning India (13/April/18)-1. Ecoscope – Retail inflation eases to a five-month low in March 2018; 2. HCL Technologies: Another acquisition; 3. Preview 4QFY18 (a. Technology; b. Cement)

MOrning India (13/April/18): 1. Ecoscope – Retail inflation eases to a five-month low in March 2018; 2. HCL Technologies: Another acquisition; 3. Preview 4QFY18 (a. Technology; b. Cement)

 Today’s top research Theme

EcoScope: Retail inflation eases to a five-month low in March 2018; Do not expect any rate action in 2018

• CPI inflation eased slightly to a five-month low of 4.3% in March 2018 from 4.4% in the previous month. The number was higher than our/market consensus estimate of 4%/4.1%.
• Like in the previous month, the decline in headline inflation in March 2018 was led by a sharp fall in vegetables inflation. While food inflation eased to a five-month low of 2.8%, core CPI touched a 43-month high of 5.2%.
• IIP rose by 7.1% in February 2018, lower than our estimate of 7.6%, but higher than consensus of 6.8%. Output of consumer goods and capital goods rose sharply, aided by a favourable base, leading to a surge in IIP.
• Although we expect inflation to rise in 1QFY19, it is unlikely to exceed 5.5%. Thereafter, we expect CPI inflation to fall, averaging below 4% in 2HFY19 on account of a high base. Our full-year FY19 average inflation estimate is 4.4%, in line with the RBI’s forecast of 4.5%. As a result, we do not expect any rate action from the central bank in 2018.

Piping hot news

India, China may join hands to counter oil price rally

• India and China may come together to protect their interests as consumer nations, in the backdrop of rising global oil prices after the Organization of the Petroleum Exporting Countries (Opec) and Russia cut supplies. State-run Indian Oil Corp. Ltd chairman Sanjiv Singh and China National Petroleum Corp. (CNPC) chairman Wang Yilin have been tasked with exploring such an engagement, which may also include joint sourcing of energy supplies, including crude oil, according to oil minister Dharmendra Pradhan.