Inflation a larger worry in India given CPI, WPI spread: Ambit Capital

Inflation is a larger worry in India given Consumer Price Index (CPI) and Wholesale Price Index (WPI) spread, said Dhiraj Agarwal, co-head of equities at Ambit Capital, on Wednesday, adding that next fiscal (FY23) will be the key for banks' credit growth.

In an interview to CNBC-TV18, he said, “The biggest risk is inflation. All other smaller events are culminating into that one number or one factor which is inflation and this inflation is a bit of a worry around the globe.”

“In the Indian context it’s a bit of a larger worry because of the huge spread between CPI and WPI which means that the corporate is taking the margin hit especially the consumer-facing companies and margin hits will reflect in earnings and earnings cut going forward which will reflect on the market,” said Agarwal.

According to him, the next fiscal will be the key to banks' credit growth. “Things like resources and metals will do decent earnings. A few banks will do okay, few may not, but for banks more relevant is what happens in the next financial year whether the credit growth picks up to double-digit or get stuck in the range of 7-9 percent that we have seen so far,” he said.

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