Capital goods space has been encouraging: Dhiraj Sachdev, HSBC AM India

In a chat with ET Now, Dhiraj Sachdev, Senior VP & Fund Manager-Equities, HSBC AM India, shares his outlook for the market.

ET Now: What did you make of the CPI and the IIP data that came out yesterday? It pretty much explains why the RBI is holding rates.

Dhiraj Sachdev: You are right. The CPI inflation obviously has been lower than expected and somewhat disappointing. But we do think that it may be partially because of the delayed monsoon.

Though vegetable prices have come off in some cases — not all cases — we do expect that this trend may continue for the next one month before the high base effect from the last year catches up. And there will be a decelerating trend over a period of time.

On the IIP side if you actually analyse the data, the negative part is on the consumer durables side, not as much on the capital goods side. Electricity, mining and capital goods have been doing pretty well.

So, it is lower than expected as far as the near-term things are concerned. Capital goods, however, have been pretty encouraging.