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The Reserve Bank of India's rate-setting committee will be meeting this week to announce policy rates and also give its commentary on the economy and inflation. D-Street is expected to track this bimonthly event.
Benchmark indices gained close to 1% last week, reaching lifetime highs, driven by foreign investor inflows. Volatility is expected due to the expiry of the February derivative series. Nifty may reach 22400 and possibly 22700. Macro data and global markets will be monitored. Auto sales and IPOs are also noteworthy.
Vikash Kumar Jain, an Investment Analyst at CLSA, discusses the impact of domestic inflows and the upcoming elections on the Indian market. He highlights the limited impact of a couple of billion dollars of inflows and emphasizes the need for further market support. He also mentions that the potential importance of the budget and post-election flows for driving market excitement.
Rahul Chadha says: "In broad consumption space, things are looking soft. In the last three-six months, we have seen all the tightness happening on the unsecured lending also. So, we will see some pressure. But within a long structural cycle, there will be mini cycles which will give good entry points for long-term investors. We want the dips and some bit of a softness so that valuations correct and you can deploy long-term money."
Jahangir Aziz, Head, Emerging Market Economics at JP Morgan, praises the Indian government's budget consolidation efforts, with the fiscal deficit lower than expected at 5.1%. He emphasizes the need for fiscal consolidation to stabilize India's debt. Aziz believes that the RBI will wait for the Fed to cut rates before doing so itself, as interest rate differentials with the US are currently low. He anticipates that once interest rate differentials narrow, there will be significant portfolio flows into emerging markets, including India, due to low ownership and positioning of emerging market as...