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from Global Investing:

Bond investors’ pre-budget optimism in India

Ten-year Indian bond yields have fallen 30 basis points this year alone and many forecast the gains will extend further. It all depends on two things though -- the Feb 28 budget of which great things are expected, and second, the March 19 central bank meeting. The latter potentially could see the RBI, arguably the world's most hawkish central bank, finally turn dovish.

Barclays is advising clients to bid for quotas to buy Indian government and corporate bonds at this Wednesday's foreigners' quota auction (India's securities exchange, SEBI, will auction around $12.3 billion in quotas for foreign investors to buy bonds). Analysts at the bank noted that this would be the last auction before the central bank meeting at which a quarter point rate cut is expected. Moreover the Reserve Bank of India will signal more to come, Barclays says, predicting 75 bps in total starting March.

That is likely to be driven first by recent data -- inflation in January was at a three-year low while growth has slowed to a decade low.  Barclays notes:

Based on our economists’ view of a 25bp repo rate cut in Q1, and a further 50bp in Q2, we expect the bond curve to fall around 55bp in a parallel move. As such, we recommend extending duration to long end bonds....Given high carry, attractive price returns and our forecast for modest nominal appreciation of the  rupee, we expect an approximately10% dollar return (FX unhedged), and a 7% return (FX hedged) on 30-year bonds in the next six months.

from India Insight:

Who are the Commonwealth Games for?

Photo

INDIA-COMMONWEALTH/GAMESAs India races to get ready for the Commonwealth Games, graffiti questioning their mass appeal has appeared over the last few weeks near some of the venues hosting the October event.

The graffiti in English, a language many middle-class well-to-do Indians are proficient in, questions the Games' focus.

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