'Cyclical sweet spot' to extend bond rally - Credit Suisse

Mon Jan 7, 2013 11:01am IST

Related Topics

Reuters Market Eye - Credit Suisse says India is in a "cyclical sweet spot" that will help local currency sovereign bonds rally further and also boost the rupee.

Credit Suisse sees no "statistically robust evidence" of a structural increase in inflation, and expects core and headline WPI to drop below 4 percent and 6 percent, respectively, by mid-2013.

The investment bank says drop in market interest rates, diminishing lagged effects of higher policy rates, weaker rupee and the government's reforms mean economic growth has bottomed.

Stronger growth bodes well for a lower fiscal deficit, while the government could surprise many with a tighter-than-expected February budget, says note.

Credit Suisse expects the 10-year yield to fall to as low as 7.5 percent by mid-2013 as the bank sticks to its view the RBI will cut interest rates by 125 basis points (bps) by 2013/14, with 50 bps of it coming on Jan 29.

Though not "structurally positive" on the currency, the investment bank is looking at a brief rally with the rupee at 53.5/dollar in March before dropping back to 56.5/dollar by end-2013.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage