May 7, 2019 / 6:40 AM / 2 months ago

BUZZ-India liquidity to remain tight, cenbank to act further - Nomura

** While Reserve Bank of India’s open market operations (OMO), forex swaps likely helped temporarily stabilise liquidity, factors like cash in circulation leakage, risk to portfolio flows, NBFC rollovers could continue to weigh on liquidity in coming 1-2 months - Nomura

** In April, RBI announced new set of OMOs to buy 250 bln rupees ($3.61 bln) worth of bonds in May, after it infused nearly 700 bln rupees in the banking system through its $5 bln buy/sell swap auction

** Research firm expects liquidity to remain tight and RBI to take further action; adds could see more sustained improvement in second half of 2019

** With expected tight liquidity conditions and pressure on NBFCs, expect further OMO announcements - Nomura

** Further announcements of OMOs can help bond markets stabilise at current levels - Nomura

** Adds, rally in bond markets can only be sustained after elections, once uncertainty on RBI policy, growth and policy continuity and fiscal policy dissipates ($1 = 69.3360 Indian rupees)

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