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CPI inflation is expected to rise over the next few months and average close to 4.7 per cent in 2018-19, driving Reserve Bank to keep key policy rates on hold in the coming financial year, says a report.

According to Swiss brokerage firm UBS, the headline CPI inflation may average close to 4.7 per cent in 2018-19 (as against 3.6 per cent estimated in 2017-18).

"In our base case, we still expect the Monetary Policy Committee (MPC) to keep rates on hold in 2018-19," the report authored by Tanvee Gupta Jain, Economist at UBS Securities India, said.

Jain however noted that there might be a pre-emptive 50 bps hike over the next 12 months to ensure macro stability.

As per the report, the key risks to the base case CPI inflation forecast include higher minimum support prices (MSPs), global crude oil prices strengthening further and populist spending in the run-up to 2019 general election.

If these risks materialise, "we do not rule out a pre-emptive 50 bps hike over the next 12 months to ensure macro stability risks are contained," Jain added.

As per Central Statistics Office (CSO) data, retail inflation measured in term of Consumer Price Index fell to a four-month low of 4.44 per cent in February on cheaper food articles and lower cost for fuel.

Retail inflation was 5.07 per cent in January. In February 2017, however, it was 3.65 per cent.

Following the easing of retail inflation in February, there is industry clamour for a rate cut by RBI next month to maintain growth momentum.

The central bank's next monetary policy review is scheduled for April 5. It had kept the policy rate unchanged in its February meeting on fears of inflation.

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Topic :- Share Market Closing Note

The Sensex was up 610.80 points or 1.83% at 33917.94, and the Nifty up 194.50 points or 1.90% at 10421.40.

About 1380 shares have advanced, 1341 shares declined, and 210 shares are unchanged.

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Topic :- Time:3.05 PM

Nifty spot close above 10420 will result in some quick upmove in coming trading sessions and close below above mentioned level will result in some sluggish movement. Avoid open positions for tomorrow.

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Topic :- Time:2.30 PM

GOLD Trading View:

GOLD is trading at 30360. It will find its immediate support at 30280 level. If it manages to hold above 30280 level then it is likely to show some quick upmove and is expected to test 30480-30500 levels quite soon. Buy on every decline till it holds above 30280 level is recommended in it.

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Topic :- Time:2.05 PM

Just In:

Nifty PSU Bank hits fresh 19-month low; 8 banks hit respective 5-year lows

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Topic :- Time:2.00 PM

Nifty spot is trading at 10358. If it manages to trade and sustain above 10365 level then expect some upmove and if it breaks and trade below 10340 level then some profit booking can be seen in the market. As nifty is trading in critical zone so one should avoid agressive trading. Though nifty is up but sentiments are still not supporting with new scams in banking getting highlighted daily.

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Topic :- Time:1.45 PM

Just In:

Unitech properties , not under litigation, to be auctioned by Supreme Court to refund home buyers.

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Topic :- Time:1.40 PM

I-T dept uncovers Rs 5,200-cr fake diamond receipts; Mehul Choksi, Nirav Modi may be party to scam:

The Income Tax department has busted an about Rs 5,200-crore scam of fake receipts, which were used to inflate books and avail loans.

According to sources, Mehul Choksi and Nirav Modi  - who are at the centre of the Punjab National Bank fraud - also used these fake receipts to show fictitious revenue turnover in their books.

Two weeks ago, the Income Tax (I-T) department raided a company based in the Bharat Diamond Bourse, in Mumbais Bandra Kurla Complex in connection to the scam. This company allegedly issued the fake receipts.

Bharat Diamond Bourse is home to about 2,500 diamond traders.

A senior official of the I-T department told Moneycontrol, There are some businesses that issue sales and purchase invoices, and charge 1 percent of the total value as commission. These invoices are used to inflate revenue in the books. These invoices are used to draw pre and post shipment credit from banks.

Another source in the investigation agency added: Department has found that Mehul Choksi and Nirav Modi used fake receipts for inflating volumes in their books. Inflated books helped them take larger amount of loan from banks.

These fake receipts, issued between 2011 and 2016, could be worth about Rs 5,200 crore.

An executive from a listed diamond company explained the modus operandi. In diamond market, there are about 10-12 companies that actively use fake receipts.

These companies issue fake invoices for sales and purchase, without any movement of inventory, for a commission of 1-2 percent. These invoices are used to inflate the sales, and draw higher credit limits from the banks, against receivables. These companies offer local as well as export bills, from their entities based in overseas locations such as Hong Kong, Dubai and Singapore.

Another executive from the industry pointed out that a similar investigation was conducted about two years ago, but was dropped due to immense political pressure.

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Topic :- Time:1.30 PM

COPPER Trading View:

COPPER is trading at 450.80. If it breaks and trade below 450 level then expect some further decline in it and above 451.50-452 levels some upmove can be seen however 454-454.50 levels to be watched out for as immediate resistance.

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Topic :- Time:1.00 PM

Nifty is trading absolutely flat. Nifty spot if manages to trade and sustain abvoe 10340 level then expect some upmove and below 10300 level some profit booking can follow in the market. Avoid big trades and trade with stoploss.

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Topic :- Time:11.30 AM

News Wrap Up:

1. Nifty reclaims 10,300 levels; ITC, Tata Steel key gainers

2. Modi govt may give homebuyers a big say in its bankruptcy fight

3. L&T construction arm bags orders worth Rs 2,597 cr

4. Govt in a fix over Rs 34,000-crore missing GST

5. Ministerial committee may pave way for ArcelorMittals Essar Steel bid

6. Enforcement Directorate, SFIO lens on Rs 54-bn loans to Usha Martin group

7. Andhra Bank hits 14-yr low as ED files chargesheet against ex-bank official

8. Deutsche Bank values asset management at up to 7.2 billion euros in IPO

9. PNB fraud case: RBI must be kept out of the mud slinging

10. Signed biggest deal with Safran Group worth $12.5 bn: SpiceJet

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Topic :- Time:11.00 AM

Nifty spot is trading at 10329. If it manages to trade and sustain above 10340-10350 levels only then quick upmove is expected in the market and if it breaks and trade below 10310-10300 levels then some profit booking can be seen in Nifty.

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Topic :- Time:10.30 AM

After positive opening nifty is still trading in positive zone but little flat. Nifty spot if manages to trade and sustain above 10340 level then expect some further upmove in the market and if it breaks and trade below 10310-10300 levels then some profit booking can be seen in the market.

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Topic :- Nifty Opening Note

Indian Stock Market Trading View For 11 March,2018:

Volatility to continue in the market with sell on rise approach in this week. Global cues to be eyed.

Nifty spot if manages to trade and sustain above 10260 level then expect some upmove and if it breaks and trade below 10180 level then some profit booking can be seen in the market. Please note this is just opening view and should not be considered as the view for the whole day.

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The Indian banking system is in "stasis" and we need an efficient financial system which does not get impacted frequently, banker Uday Kotak said today.

In the remarks that come amid the discovery of the nearly Rs 13,000-crore scam at Punjab National Bank scam, one of the biggest in the Indian banking history, Kotak also said there is a case for trimming the number of state-run lenders.

"We can't be bogged down every few years, from time-to-time, where the system gets into a stasis like it is today," the executive vice chairman and managing director of Kotak Mahindra Bank said at the India Today Conclave here.

There was no explicit mention of the scam at PNB allegedly involving gems and jewellery players Nirav Modi and Mehul Choksi by Kotak, who maintained that he does not wish to get into any "political debate".

"We frankly need fewer public sector banks which may happen through mergers and shrinkage," he said.

At present, there are 20 entities, including largest lender State Bank of India, which are run by the government and account for nearly 70 per cent of the assets in the system. Almost all of them are affected by high levels of non-performing assets (NPAs).

Kotak has grown his bank to be the fourth largest in the private sector space by merging with ING Vysya Bank. The lender recently raised Rs 5,500 crore in core capital for various purposes including the possibilities of inorganic growth.

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Activity in India's service industries contracted in February for the first time since November as rising price pressures led to a decline in new businesses orders, a private survey showed on Monday.

Services activity suffered for most of last year following a ban of high value currency notes in November 2016. The July 1 implementation of a national sales tax 1 was another setback, weakening demand.

The Nikkei/IHS Markit Services Purchasing Managers' Index fell to a six-month low of 47.8 in February, compared with January's 51.7.

"Both activity and new work declined for the first time since November, with rates of contraction the strongest since August, thereby ending the recent recovery experienced by India's service sector," said Aashna Dodhia, an economist at IHS Markit.

"Anecdotal evidence pointed to weak underlying demand conditions in the service economy."

A sub-index tracking new business sank to a six-month low of 48.0 last month from 51.7 in January as demand continued to be affected by higher prices.

The survey said prices rose at their fastest pace in seven months after a sharper hike in input costs forced services firms to transfer some of the inflationary pressure to customers.

Despite declining slightly in January, fuel prices remained elevated. That and expectations of massive government spending over the coming year are likely to keep the inflation rate above the Reserve Bank of India's medium term target of 4 percent in the near future, increasing the chances of a hike in the central bank's benchmark rate.

In February, manufacturers also faced accelerating inflation, pushing overall input prices to rise at their quickest pace in three and a half years.

The contraction in services activity offset an expansion in manufacturing and caused a composite PMI, which includes both, to plunge to 49.7, its lowest since August, from 52.5 in January.

"However, (services) firms seem to believe that the decline is transitory as they raised their staffing levels at the joint-fastest pace since June 2011, in line with positive projections of activity growth," said Dodhia.

Asia's third-largest economy grew at its sharpest annual rate in more than a year during the quarter to end-December, 7.2 percent, reclaiming its title of the world's fastest growing major economy.

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The government will not go for an expenditure cut in 2017-18 to meet fiscal deficit target of 3.5 per cent of GDP even as it has breached the level of 113.7 per cent of the target, Expenditure Secretary Ajay Narayan Jha said today.

"There is no expenditure cut. There has been a policy, there will not be any expenditure cut," Jha told reporters on the sidelines of an event here.

When asked how the government will meet the revised fiscal deficit target of 3.5 per cent, he said indirect tax collections have already been factored into the revised target.

The government has accounted for only 11-month of GST against 12-month of expenses as March GST numbers would come in April.

Fiscal deficit has touched Rs 6.77 lakh crore at the end of January 2018, 113.7 per cent of the target for the year, on account of higher expenditure.

The government had revised upwards the fiscal deficit at Rs 5.95 lakh crore or 3.5 per cent of GDP in the recent Union Budget.

Earlier, the fiscal deficit target was 3.2 per cent. Jha said the economy is looking up as the key sectors are showing buoyancy and growth.

"We expect that it will grow further and as per expectations. As far as fiscal deficit is concerned...a lot of adjustments will take place through recoveries which means that there is a net budgeting aspect," he said.

Further, he said the buoyancy in revenue also comes in the last two months of financial year and the fiscal deficit numbers will remain well within the revised target. Because of the early budget last year, the expenditure pace has been remarkably good, said the official.