Focus on quality, easily redeemable funds with a horizon of six to nine months
The trajectory of headline inflation in India has been relatively volatile lately. Headline WPI touched a peak of 11.15 percent in July 2008 due to a spurt in crude oil prices, and fell sharply to almost zero in June 2009 due to the global financial crisis. From there, the WPI rose back to around 10.88 percent in April 2010 amid a sharp increase in food and fuel inflation.
In 2014, we do expect one more rate hike, or perhaps two, depending on how headline inflation behaves and then a prolonged pause is expected until the previous rate hikes have had a meaningful impact in bringing down headline inflation on a sustained basis.
(This story appears in the 24 January, 2014 issue of Forbes India. To visit our Archives, click here.)