B Prasanna, head-global markets group at ICICI Bank and Soumya Kanti Ghosh, group chief economic advisor at State Bank of India (SBI), shared their views on core inflation and outlook for the bond market.

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Prasanna said the core inflation was quite heartening and lower-than-expected food inflation was positive.

“The trajectory of inflation, we do expect it to be on the lower side in the first half vis-à-vis the RBI estimate and slightly picking up in the second half,” Prasanna said on Thursday.

According to Prasanna, "Global factors definitely moving favourably towards policy with both Fed rate cut expected as well as oil prices falling."

“Our official call for a rate cut is for 25 bps cut in either August or October policy, but yes the odds of a rate cut in the August policy increased after the data came over,” added Prasanna.

On the yield front, he said, "We see 10-year yield in 6.85-7.10 percent till the budget."

Ghosh said he was pleased with the core inflation falling.

“The core is 10-15 bps lower than the market expectation and at this rate, core will definitely go below 4 percent in the next couple of months and there could be a convergence of the headline and core, so that’s one positive point,” said Ghosh.

On the IIP front, Ghosh said, “Index of Industrial Production (IIP) numbers are surprising. We are expecting negative or in fact a zero growth, but that’s largely could be a one-off effect. I do not expect IIP to trend at this level for the next month or so.”