India's economy can still grow well.

The Indian Rupee (INR) continues to hover near its all-time high weakness at around 83.4 INR per US dollar due to increased foreign outflows in India, even though the RBI (Reserve Bank of India) has been selling foreign currency reserves worth more than $23 billion to support the currency. Additionally, the inflation rate in November increased less than expected. However, India's weak currency could lead to increased import costs for energy, which might have broader economic repercussions.

The inflation rate in India rose by 5.55% in November, slightly below the market's forecast of 5.7%. Food inflation notably surged at 8.7%, with consistently rising food prices in India becoming a worrying trend. Erratic weather patterns, attributed to phenomena like El Niño, directly impact agricultural output, particularly spices which rose by 21.6%, followed by pulses at 20.2%, and various vegetables at 17.7%.

The Reserve Bank of India (RBI) decided to maintain the policy interest rate at 6.5% during its December meeting. The RBI also kept the inflation target range at 2-6% to support India's economic growth. However, Shaktikanta Das, the RBI Governor, cautioned about the possibility of an increased inflation rate in December due to upward pressure on food prices. The RBI projected inflation at 5.4% for 2023 and kept the fixed deposit interest rate at 6.75%.

India's Gross Domestic Product (GDP) expanded by 7.6% year-on-year in the last quarter, surpassing the expected increase of 6.8%. The growth primarily stemmed from the manufacturing and construction sectors, which grew by more than 13%. India continues its consistent investment in domestic infrastructure, evident in the government's increased spending on infrastructure by 11%. Moreover, leading corporations have started investing in the country, contributing to positive growth forecasts for India's future.

The yield on India's 10-year government bonds remains high at above 7.25%, slightly retracting. This reflects market anticipation of the RBI maintaining the key interest rate at 6.5% in the recent meeting. The GDP figures illustrate India's robust growth. Additionally, the RBI adjusted its growth forecast for the next year, emphasizing the economy's resilience against global economic slowdowns.

Techical analysis data (5H)

Resistance: 83.411, 83.446, 83.464

Support: 83.358, 83.340, 83.304

Source: Investing.com