India's inflation close to post financial crisis lows, says Nomura

Nomura, the Japanese brokerage, on Tuesday said inflation levels in India are close to post global financial crisis lows, and retained its positive stance on the country's stock market.

According to Nomura, the country's accounts reveal that inflation rates across sectors in the domestic industry are close to post-GFC (global financial crisis) lows.

"Inflation across aggregate sectors is close to post-GFC lows; we reiterate our positive stance on the market and remain OW (overweight) on financials," the financial services provider said in a research note.

The headline retail and wholesale inflation figures since July coincided with the collapse of global commodity prices, led by crude oil.

Among other factors that led to the decline in headline retail inflation include significant fall in global agricultural commodity prices and strong base effects.

According to official figures, wholesale inflation fell to a five-year low at 1.77 per cent in October while retail inflation hit a record low of 5.52 per cent in the same month.

"We maintain our positive view on the market and overweight stance on financials," Nomura said, adding that the Sensex is trading at around 7 per cent premium to its 5-year average which the global financial services major thinks is not expensive.

In August, Nomura had raised its Bombay Stock Exchange (BSE) Sensex target to 30,310 for August 2015.

Stock markets have seen significant gains in 2014 and the benchmark BSE index Sensex has gained 7,268.23 points (or 34.33 per cent) so far.

The 30-share BSE barometer was trading 0.41 per cent lower at 28,441.16 in the afternoon on Tuesday as the Reserve Bank of India did not cut the key interest rate, maintaining status quo at the monetary policy review.