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MARKET EYE-Buy India's 10-year govt bonds, target 7.5 pct - StanChart
January 29, 2013 / 10:43 AM / 5 years ago

MARKET EYE-Buy India's 10-year govt bonds, target 7.5 pct - StanChart

* Standard Chartered Bank maintains its 'overweight' stance on
government bond duration on the back of softening WPI inflation
and easing policy rates.
* Recommends investors buy 10-year bonds with target 7.50 pct
and stop-loss of 7.95 pct.
* Reduced likelihood of OMOs in near term on CRR cut may make
demand/supply dynamics slightly unfavourable in the near term as
480 billion rupees of supply scheduled for February.
* However, unfavourable demand/supply dynamics will be transient
as no issuances scheduled in March and with further rate cuts
expected, the note says.
* Bank estimates that liquidity in the banking system will
remain in deficit even after the government spends its entire
cash surplus.
* Standard Chartered expects 25 bps repo rate cut in March with
the repo rate falling to 7 pct by end-2013.     


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