• FM is likely to meet the FY14 fiscal deficit target of 4.8% of GDP, project a FY15 deficit at 4.2%
• Spending cuts, higher non-tax revenues will allow adherence to the fiscal consolidation plan
• Gross borrowing likely to be c.INR 5.8-6.0tn; w...
• RBI unexpectedly hikes the repo rate to contain inflation; we expect another 50bps of hikes in Q3-FY14
• Despite our higher inflation forecasts, more easing of liquidity conditions is likely, including a 50bps reduction in the MSF
• We expect th...
Event – The Reserve Bank of India (RBI) surprised the market today by hiking the repo rate by 25bps to 7.50%. Although a reduction in the Marginal Standing Facility (MSF) rate by 75bps to 9.50%, and a marginal relaxation in the minimum daily mainte...
• RBI’s Rajan to stay focused on inflation; major announcement likely to be deferred
• Marginal tweaking of liquidity-tightening measures likely to support market sentiment
• Rates market is positioned light; stay Neutral on GoISec duration
FX market stability is the immediate focus; RBI provides incentives for banks to raise more USDs
• Containing inflation will remain a priority; increased transparency in monetary policy stressed
• Financial-market reform and deepening financial m...
Finance minister expects USD 11bn of incremental inflows in FY14 once new measures are implemented
• Fresh inflows should help the external sector, but limited details on these measures keep us cautious
• We stay Neutral on the INR and expect a sh...
• RBI leaves policy rates unchanged; a dovish policy statement focuses on currency stability
• Reversal of liquidity-tightening measures and a return to monetary policy easing depends on INR stability
• Presses for urgent action to reduce C/A def...
RBI takes strong steps to tighten INR liquidity, reversing its recent monetary-easing stance
• Decisive action could lead to a short-term rebound in the INR, but more measures are needed to tackle structural challenges
• Rates market sentiment lik...
• Weaker INR could reverse some recent improvements in India’s macroeconomic conditions
• Inflation, fiscal deficit may worsen; positive C/A impact is unlikely, and capital flows may slow
• Kick-starting the investment cycle is crucial, as other ...
FOR DISTRIBUTION IN INDIA
• This supersedes the version dated 21 June 2013. Page 1, corrects recommendation for Indian importers.
• USD-INR is likely to extend gains into early Q3 on Fed QE tapering concerns, capital outflows
• We look for a par...
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This report provides an economic outlook for more than 60 economies worldwide and investment implications for commodities, credit, equities, FX and interest rates markets in 2014. We expect a better 2014, with world economic growth picking up and inflation staying benign. Global growth should increase to 3.5% in 2014 from 2.7% in 2013, helped by improvements in economic activity in the US and Europe. A pick-up in growth in the West is good news for the rest of the world, and we expect emerging economies’ growth to outpace G7 growth by almost 4 percentage points.
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