Indian market down a bit

India's wholesale inflation rose sharply in December, data showed Thursday, bolstering market expectations of monetary tightening by the central bank when it meets later this month. The wholesale price index, India's main gauge of inflationary trends, jumped to 7.31 percent year on year in December due to particularly big rises in the cost of potatoes and sugar, provisional data from the commerce ministry showed. The latest reading follows a string of impressive data that has shown the Indian economy bouncing back rapidly from a slowdown brought on by the global financial crisis and recessions in developed countries. The wholesale inflation rate had climbed by a larger-than-expected 4.78 percent in November from a year earlier after rising by 1.34 percent in October. Analysts say that when the Reserve Bank of India meets on January 29 it will likely drain some of the liquidity that was pumped into the financial system last year to encourage lending. "Although the key risk to inflation is from shortages of rice, sugar and pulses, it (the headline rate) would feed in to general inflationary expectations sooner or later," said Rupa Rege Nitsure, chief economist at Bank of Baroda.