India's inflation may be "under pressure" until December and the central bank need not follow the policy of reducing interest rates being pursued by some counterparts abroad, Finance Minister Pranab Mukherjee said.

"One need not come to the conclusion that one set of prescriptions will be effective in another atmosphere and in another situation," Mukherjee told a press conference in New Delhi today.

Policy makers across Asia have been shielding their economies from Europe's debt crisis and a faltering U.S. recovery, with Indonesia cutting borrowing costs and Singapore pledging to slow currency gains this month. Governor Duvvuri Subbarao said Oct. 12 that inflation must ease before India's central bank can start lowering interest rates.

"When inflation is persistently high, the RBI will have to stick to monetary tightening," said Dharmakirti Joshi, a Mumbai-based economist at ratings company Crisil Ltd. "Different countries have different sets of problems and India is going through a serious inflation problem."

He expects the Reserve Bank of India to raise its benchmark repurchase rate by a quarter of a percentage point to 8.5 percent in the Oct. 25 policy decision.

David Fuller's view India's stock market (monthly, weekly & daily) has underperformed since its high in November 2010, when it soared relative to its rising 200-day moving average to test the 2008 peak. Subsequently, rate hikes and corruption scandals have reduced India's appeal in the eyes of international investors, as I have mentioned before.

Nevertheless, as the world's largest democracy, with exceptionally attractive demographics, plus awesome intellectual and managerial ability, India's stock market will always be of interest, subject to timing.

Rate hikes to curb inflation are a medium-term cyclical problem and with growth slowing it is likely that India is in the latter stages of its current monetary tightening cycle. Meanwhile, India remains one of the world's fastest growing economies although risks remain to the downside.

India's corruption problem is legendary but the outrage now expressed by a rapidly growing middleclass is new and a very positive development. India's systemic corruption is too deeply entrenched to be weeded out quickly but at least it does not have to reinvent the wheel to address this problem.

India's stock market, temporarily a laggard rather than a leader, will take its cue from other indices, not least those of Wall Street. Consequently, it steadied near the August and September lows earlier this month and is currently testing the upper side of its present range, albeit within an overall downward trend.

Any more than a brief reaction on Wall Street, which is temporarily overbought, could easily lead to a retest of lateral support in the 16,000 region by the Sensex Index shown above. Nevertheless, I would rather incrementally buy than sell India on any further weakness. Taking a longer-term view, it remains a Fullermoney favourite for the decades ahead. The largest single equity hold in my personal long-term portfolio is in the JPMorgan Indian Investment Trust (JII LN) (monthly, weekly & daily), which I have held since 2Q 2003. It currently trades at a discount to NAV of 10.5%.

Here is an additional article from Bloomberg today indicating that opposition towards the Reserve Bank's policy of monetary tightening is growing.