BNP Paribas Says Lower Inflation, Yields May Prompt RBI To Cut Rates Twice This Year
The market is favourable for long-term investors who aren’t perturbed by short-term fluctuations, says Manishi Raychaudhuri.
The Reserve Bank of India may cut rates twice this year on account of lower inflation and falling yields, according to BNP Paribas’ Manishi Raychaudhuri.
Bond yields in major developed markets and emerging markets like India may follow suit, the Asia-Pacific equity strategist at the French international banking group, told BloombergQuint in an interaction. The central banks across the world are lowering rates...an affirmation for global investors that yields will continue to decline, he said.
India is witnessing additional tailwinds due to fall in inflation and strengthening of monsoon precipitation. “If inflation keeps on shooting well below the RBI’s target, there could be a different reaction function from the country’s central bank,” Raychaudhuri said.
Key Highlights:
- Foreign investors are bullish on Indian equities from a long-term perspective.
- Increase in free float favourable for foreign portfolio investors.
- Higher taxation on capital gains to dampen investor sentiment in short term.
- Market is favourable for long-term investors who are not perturbed by short-term fluctuations.
- Investors need to be thoughtful and careful in stock and sector selection.
- Both retail and corporate private sector banks are interesting investment targets.
- Non-banking financial companies continue to remain a risky bet.
Watch the full interview here: