Business
If softening of inflation continues further, then it would eventually lead Fed to taper its aggression: Sneha Poddar

Sneha Poddar, AVP Research, Broking & Distribution, Motilal Oswal Financial Services, said if the softening of inflation continues further, then it would eventually lead to the US Federal Reserve to taper its aggression. The Reserve Bank of India (RBI) is more likely to follow the US Fed and thus would not taper its tone till its is adopted by the latter.
Here are excerpts from the interview:
Q. Do you think after US CPI inflation print which came below estimates will allow Fed to go slow on rate hike, and RBI will follow the same?
A: The US CPI inflation data for the month of July came in at 8.5 per cent, down from 9.1 per cent in June and slightly below expectation of 8.7 per cent. However the Fed officials have responded to softening inflation data by saying it doesn’t change their stance towards higher interest rates, as the inflation still remains above the unacceptable levels. Since this is just first sign of inflation peaking out, and is too early to rule out subsequent high inflation data, uncertainty will loom over when the US Fed would slow down on its aggressive rate hikes. If the softening of inflation continues further, then it would eventually lead Fed to taper its aggression. The RBI is more likely to follow US Fed and thus would not taper its tone till its is adopted by US Fed.
Q. 5.40 per cent repo rate is already above pre-pandemic level, but still the RBI maintains “withdrawal of accomodation” stance. Do you think the neutral level of the repo rate is at or above 6 per cent?
A: The RBI has cumulatively hiked the policy repo rate by 140bp to 5.4 per cent in FY23 till date. It reiterated its continued focus on “withdrawal of accommodation” to contain inflation while supporting growth. However, it kept its inflation/growth forecasts unchanged at 6.7 per cent/7.2 per cent YoY, respectively, for FY23. This seems very confusing as how can the rate hikes help contain inflation without hurting growth? Further, the MPC did not sound dovish at all. There was neither a change in stance nor a relief in the RBI Governor’s statement disclaiming a possible pause in rate hikes. Thus we believe that the terminal rate in this hike cycle might be at 5.75-6.0 per cent
Q. In the current market conditions, which sectors are likely to perform well from an investor returns point-of-view?
A: We believe BFSI can do well in rising interest rate scenario. On the other hand with good monsoon, upcoming festive season and softening of commodity prices, the demand both urban and rural are expected to revive and pick up and thus we are positive on Consumer, Auto and Retail. With the opening up of economy and the structural shift being witnessed in favour of the industry post Covid, QSR remains in a sweet spot. While uncertainty around quantum of interest rate hikes is likely to impact the performance of real estate stocks in the near term, longer-term thesis on revival of housing cycle remains intact. There is imminent opportunity in the domestic Hospitality industry and the expected upcycle bodes well for the sector. We are selectively looking at IT sector as valuations have become attractive for accumulation from long term perspective.
Q. Where you see levels on benchmark indices going forward considering the FI inflows in the domestic equities?
A: Strong momentum in the market has helped Nifty rally by more than 2500 points from June lows, and thus, has wiped out the entire decline for the calendar year till date and turned positive. Strong macro data, FII turning positive, steady earnings and healthy progress in monsoon have been some of the key factors supporting the market. FIIs (including primary market) turned positive for the month of July after nine months of continuous outflows and has been continuous buyer throughout the month of August so far. With the softening of commodity prices, even inflation seems to be peaking out and festive season is about to begin which should support demand and thus corporate earnings. Thus the overall trend in the market seems to be positive, however bouts of volatility can’t be ruled out as uncertainty over rate hike quantum and China-Taiwan tussle continues. Further, with this recent rally, Nifty now trades at ~20x FY23E, above its 10-year average, thus offering limited upside in the near term. Going forward, it could be a tug of war between domestic and global factors which could determine the market direction.
International
20 South Korean families evacuate Iran amid escalating Israel-Iran conflict

Seoul, June 19: Twenty South Korean nationals and their family members have evacuated Iran via a land route and arrived safely in Turkmenistan amid escalating tensions between Israel and Iran, the foreign ministry said.
Eighteen South Koreans and two Iranian family members crossed the border into the Central Asian country by transportation provided by the South Korean government Tuesday morning (local time) and arrived in the capital, Ashgabat, the next day, the ministry said.
The eastern border land route chosen by the government is about 1,200 kilometres, and it takes around 16 hours to travel by bus without breaks, a ministry official said.
A rapid response team from Seoul was in Turkmenistan to assist with the evacuation efforts.
About 110 South Koreans had been estimated to be in Iran as of last Friday, when the Israelis initiated an attack on Iranian nuclear and military facilities.
The official also indicated that preparations are underway for an additional evacuation.
The government has been weighing options to ensure the safety of South Korean nationals in the Middle East, amid the escalating tensions following massive airstrikes between Israel and Iran.
“Given the continued exchange of military strikes between the two sides this week, growing concerns over the safety of our citizens, and the ongoing closure of Iranian airspace, we have decided to assist our nationals in evacuating Iran via land routes,” the ministry said.
The operation comes as countries are closing their embassies and evacuating their citizens from the region, either to return home or relocate to nearby nations, media reported.
The South Korean government has also provided transportation and assistance to 23 South Korean nationals to leave Israel via a land route to Jordan.
Earlier in the day, an Iranian ballistic missile struck Soroka Hospital in Israel’s Beersheba, seriously injuring several patients, doctors, and staff as the conflict entered its seventh day.
“Soroka Hospital in Beersheba — where Jews, Muslims, Christians, and Arab Bedouin receive care — was just hit by an indiscriminate Iranian ballistic missile. Israel will continue to do what must be done to protect all its people, from all walks of life,” the Israel Foreign Ministry said in a post on X.
According to the Israeli Defence Forces (IDF), Iran fired around 30 ballistic missiles at Israel on Thursday, and one of them struck the hospital in Beersheba.
International
Israeli military announces killing Hezbollah commander in Lebanon

Tel Aviv, June 19: The Israel Defence Forces (IDF) on Thursday announced that it had eliminated Yassin Abdel Menam Ezz al-Din, the commander of the artillery in the Litani sector of Hezbollah in Lebanon.
“Yesterday, the IDF attacked and eliminated, using aircraft, in the Barish area in southern Lebanon, the terrorist, Yassin Abdel Menam Ezz al-Din. The terrorist had launched numerous firing lines toward the north of the country during the war and engaged in attempts to rehabilitate the artillery forces of the terrorist organisation Hezbollah. Yassin Abdel Menam Izz al-Din’s actions constituted a blatant violation of the understandings between Israel and Lebanon,” the IDF said in a post on X.
The IDF asserted that it continues to monitor and thwart attempts by the “terrorist organisation Hezbollah to promote readiness to harm the State of Israel under the auspices of the war with Iran,” and will continue to work to eliminate any threat to the citizens of the State of Israel.
In a separate development, the IDF also mentioned that it had demolished the home of Samer Hussein, who carried out a shooting attack at the Gitti Avishar intersection in November 2024 in Ariel (West Bank).
“Engineering forces from the Samaria Brigade operated last night in the village of Einabus to demolish the home of terrorist Samer Hussein, who carried out a shooting attack at the Gitti Avishar intersection in Aerial. The attack injured 5 Israeli civilians and 4 soldiers,” the IDF posted on X.
The military reports that Samer Hussein was associated with Hamas. In November 2024, he opened fire on a bus and a bus stop where several soldiers were present. The attack resulted in injuries to nine individuals: three suffered serious injuries, one was moderately injured, and five had minor injuries, including four soldiers.
“The security establishment, with the backing of legal authorities, decided to demolish the terrorists’ home as part of the deterrence policy, according to which anyone who carries out an unusual terrorist attack, even if no one is killed, will have their home demolished. The IDF will continue to act to thwart terrorism in Judea and Samaria and to bring to justice terrorists who have acted to harm civilians or security forces,” the post added.
International
Iran ballistic missile hits hospital in Israel, dozens injured

Tel Aviv, June 19: An Iranian ballistic missile struck Soroka Hospital in Israel’s Beersheba, seriously injuring several patients, doctors, and staff as the conflict entered its seventh day on Thursday.
“Soroka Hospital in Beersheba — where Jews, Muslims, Christians, and Arab Bedouin receive care — was just hit by an indiscriminate Iranian ballistic missile. Israel will continue to do what must be done to protect all its people, from all walks of life,” the Israel Foreign Ministry said in a post on X.
According to the Israeli Defense Forces (IDF), Iran fired around 30 ballistic missiles at Israel on Thursday, and one of them struck the hospital in Beersheba.
President of Israel, Isaac Herzog, took to his social media to narrate the horrific scenes in the hospital after the attack on the civilians.
“A baby in intensive care. A mother by their bedside. A doctor rushing between beds. An elderly resident in a nursing home. These were some of the targets of Iran’s missile attacks on Israeli civilians this morning. Soroka Hospital, located in Be’er Sheva, is one of Israel’s finest — serving the entire Negev region, caring for Israelis of all faiths and our neighbours the Palestinians who come especially to be treated there. Its devoted staff — Jews and Arabs — work side by side in extraordinary harmony, united by the mission to heal,” the President posted on X.
“I send strength and support to the medical teams, to the patients, and to the residents of Be’er Sheva and all cities attacked across Israel this morning. In moments like these, we are reminded of what’s truly at stake and the values we are defending,” the post added.
Condemning the attack on the hospital, Israeli Prime Minister Benjamin Netanyahu said, “This morning, Iran’s terrorist tyrants launched missiles at Soroka Hospital in Beersheba and at a civilian population in the centre of the country. We will exact the full price from the tyrants in Tehran.”
Israeli Foreign Minister Gideon Sa’ar criticised the Iranian regime, stating that it intentionally attacks the civilian population.
“The Iranian regime fired a ballistic missile at a hospital. The Iranian regime deliberately targets civilians. The Iranian regime is committing war crimes. The Iranian regime has no red lines,” the Foreign Minister said in a post on X.
Israeli Deputy Foreign Minister Sharren Haskel slammed Iran’s “deliberate” and “criminal” activities and posted, “Iran just hit Soroka Hospital in Be’er Sheva with a ballistic missile. Not a military base. A hospital. This is the main medical centre for Israel’s entire Negev region. Deliberate. Criminal. Civilian target. The world must speak out.”
The conflict erupted last Friday when Netanyahu announced the launch of ‘Operation Rising Lion’ against Iran, a targeted military operation to roll back the Iranian threat of nuclear weapons to Israel’s survival.
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