Onshore clients are optimistic on India’s long-term prospects for growth and market performance
• Short-term caution reflects concerns over exogenous risks and the impact on external capital
• Locals fear that global investors may lose patience wi...
Hedge funds in the UK and US have significantly reduced long USD positions, awaiting clear trends
• Real-money funds are focused on relative value, favouring O/W AXJ vs. Latam currencies and O/W INR
• European corporates perceive long-term value i...
Indian corporates we spoke to expect gradual INR depreciation in the short and medium term
While sentiment remains positive, corporates note the lack of a significant pick-up in domestic demand
Corporates are also more uncertain over the quantum o...
• Overview – In a challenging market environment, macroeconomic and policy divergence – the ‘new normal’ – remains the critical foundation of our updated views and forecasts, with the US economy, USD and US rates leading the way higher. This will ev...
• RBI keeps repo rate unchanged at 7.75%, makes further action contingent on upcoming data
• We expect another 25bps inter-meeting cut in March on benign inflation, further fiscal consolidation
• We remain positive on IGBs; recommend short- and me...
Event – The Reserve Bank of India (RBI) delivered a 25bps rate cut today, cutting the repo rate to 7.75% and the reverse repo rate to 6.75%, before its scheduled policy meeting on 3 February. A significant slowdown in inflation momentum (December CP...
We expect a gradual GDP recovery in FY16; lower inflation to pave the way for 75bps of repo rate cuts
• Any deviation from the stated fiscal consolidation path would pose a risk to our current forecasts
• We expect most of the government’s recentl...
• We review the NDA government’s policy actions as it nears the end of its first six months
• The pace of decision-making has picked up, though ‘big-bang’ reforms are delayed
• ‘Silent’ reforms to improve the ease of doing business are importan...
Direction signal stays negative on weak demand for EM debt
• Allocations moved towards Brazil in August on Marina Silva, a catalyst for change; now Dilma fights back
• Brazil’s subsequent underperformance makes it cheap and positioning is not skew...
The RBI has intervened substantially in the FX market to absorb capital inflows and limit volatility
• Concerns are that excess INR liquidity will be created and the RBI will incur quasi-fiscal costs
• We estimate that the RBI can intervene c.USD ...
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