'Cyclical sweet spot' to extend bond rally - Credit Suisse
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.
- Tweet this
- Share this
- Digg this
- Malaysia Airlines plane missing at sea off Vietnam, presumed crashed
- EXCLUSIVE - Probe into missing Malaysia plane looks at possible mid-air disintegration - source
- Afghanistan's powerful Vice President Fahim dies
- India set to challenge U.S. for election-spending record
- Interpol says use of stolen passports on flights "of great concern"
A missing Malaysia Airlines jetliner may have turned back from its scheduled route before vanishing from radar screens, military officers said on Sunday, deepening the mystery surrounding the fate of the plane and the 239 people aboard. Full Article