According to certain fiscal pundits the steps jointly and separately mooted by the Government of India and the Reserve Bank (RBI) to contain inflation is well expected to show result by the second half of the financial year that ends in March 2011. In fact, a senior fiscal advisor has also aired the same view in the national capital Tuesday last. If this happens we can clearly assume that the inflation graph will start dipping in the next four weeks from now and the pressure for further fiscal discipline will lesson.

According to Deputy Chairman of India’s Planning Commission, Montek Singh Ahluwalia short term policy calibration would depend on the evolving macroeconomic situation.

Its is a fact if the current fiscal proposals are well implemented the price inflation will have to be below 6 percent by December this year, compared with 10.55 percent in June last. However the RBI expects this to happen only by the end of the current fiscal.

“Whether he (RBI governor) needs to tighten more or not depends on what happens to prices … they have to make a judgment if whether the actions taken have got us on a path that brings normalcy in December.”

Wholesale price index, India’s most closely watched inflation measure, has shot up more than 10 percent during the last five months. The index rose 10.55 percent in June and entered double-digit in July.

“If it turns out that, say, four weeks down the road it clearly looks like inflation is coming down, then the pressure to tighten further may be less,” Ahluwalia, a key aide of Prime Minister Manmohan Singh, told Reuters late Tuesday.

  , The Reserve Bank of India (RBI) has raised interest rates four times by a total of 1 percentage point since March, and a deputy governor last week said the RBI had done enough and now had a “handle on inflation this year

You have seen very strong FII inflows. There are strong indications to believe that the flow will keep continuing with less lethargy, unless some untoward external upsurges happen in the market either in the domestic or global. India is standing out in terms of its GDP.  India is becoming a prominent player in global portfolios including pension fund. This is the much anticipated and expected welcome shift. Though this has come gradual it is going to continue and I can hardly see any chance of drifting or shifting.

I think India’s tale in terms of earnings is expected to surge by the end of this year and  I foresee the sense to jump over the magical mark of 20000 by December2010 –Jan 2011.

So please pick your blue chips at right level.

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