Mixed backdrop

India CPI jumps to 6.09%, above the RBI band, as US inflation re-accelerates and real yields rise.

Growth is firm and India is seeing inflows, so the backdrop is supportive. Inflation is the main constraint: India CPI is above the RBI's band and US CPI is rising, which keeps rates restrictive. Crude has eased and foreign money is buying Indian equities, but higher real yields and a weak semiconductor trade are pressuring long-duration growth.

• India CPI is 6.09% in October, above the RBI's 2-6% band and up from 5.54%, with food inflation at 8.94%. Repo is 5.50%, so room for rate cuts is limited, which pressures NBFCs, realty and autos.
• The US 10-year yield is 5.10%, up 10 bp on the day, and the 10-year real yield is 2.78%, up 35 bp in three months. Higher real yields raise the hurdle for unprofitable growth, gold and foreign money staying in Indian equities.
• Semiconductors are down 11.2% in a month and 9.5% behind the S&P 500, while the Nasdaq is down 5.0% in a month. This is a sentiment headwind for Indian IT services and a drag on US mega caps.
• Brent is at $95.59, down 9.8% in a month. Lower crude helps India's import bill, which supports oil marketing companies, paints, tyres and aviation, and weighs on upstream producers.
• FIIs bought Rs 7,831 crore and DIIs sold Rs 6,331 crore on 12 November, and 73% of Nifty 200 stocks are above their 50-day average. This supports large-cap banks and the rupee, but the Nifty's 14-day RSI of 77 says the rally is stretched.

• Higher US real yields and rising US inflation are pressuring long-duration growth. Nasdaq down 5.0% and semiconductors down 11.2% in a month confirm this, though the Russell 2000 is up 2.5% in a month, so small caps are not clearly confirming it.
• Lower Brent (down 9.8% in a month) should ease headline inflation and US breakevens, which sit at 2.24%. Prices partly confirm this on the US side, but India CPI still rose to 6.09%, so the crude relief has not yet shown up in Indian headline inflation.
• A firmer dollar (DXY up 1.1% in a month) should pressure the rupee and FPI flows. Prices do not confirm this: USD/INR fell 1.0% in a month to 94.17, and FIIs bought heavily on 12 November.

• Today at 19:00 IST: US PPI m/m, forecast 0.4% against 1.3% previous, and core PPI m/m, forecast 0.3% against 0.7% previous. A hot print would add to rate pressure on growth stocks.
• Nifty expiry on 17 November: spot is 25,189.9, the implied range is 24,857 to 25,523, max pain is 25,150 and the put wall is 25,000. Spot sits close to max pain and the put wall, so these levels matter for the next move.
• SPY dealers look short gamma, estimated at -4.62 bn dollars per 1% move, so moves may be amplified. Watch the call wall at 775 and the put wall at 760, since a break of either could drive larger intraday swings.