Indian Inflationary Concerns!

With a falling global food credit and steep rise in food prices, the indian government faces one of the biggest challenge to prevent the strongest growth momentum witnessed by the indian economy from beaten down. The rise in real estate prices and the food prices are coupled and can never be justified. For Example the indian government has been saying for sometimes that the sugar output is nearly 50% above sugar demand this year.

The indian sugar demand is around 19.8 met ton whereas the output expected was 28 met ton. Sugar companies in india has been witnessing some huge losses in their balance sheets for nearly 2 consecutive years. But the sugar price had seen a dramatic rise of nearly 60 percent in 7 months time. This shows the control that the government has on controlling food prices.

Real estate price rise is another threat and shows similar patterns to the U.S housing price rise in 2005. The RBI governor himself has said that he has been "Shocked" by the inflation figures that has recently come out. Can the indian economy absorb shocks like these and move on? or the economy is well insulated by policy makers to overcome a shock of this sought?

The salary paid by the I.T companies is attributed to the steep rise in indian real estate prices but the truth is that speculators are speculating on the salaries offered by the I.T. companies.

Stock investments that could be beneficial in these times:
One could look into stocks that are involved in agricultural realted and agri products. Some companies that could benefit from the food price rice are KRBl, a leading basmati rice producer.(NSE symbol:KRBl) Rei Agro, Balrampur chini , itc, jain irrigation, Ksb Pumps and Kohinoor Foods. Investors can position themselves into rice producing and exporting companies as the Asian rice crisis happening is a bit hard to resolve.