Expert Zone
Straight from the Specialists
India Markets Weekahead – Volatility seen as RBI policy review in focus
(Any opinions expressed here are those of the author and not of Thomson Reuters)
Volatility is here to stay and trying to predict the markets on a daily basis is a futile exercise. It’s no better than tossing a coin.
Monsoon rains are early and heavier then normal, raising the hopes of green shoots in the next few months. Macro numbers were showing signs of bottoming out but the rupee slide has thrown calculations awry. A feeble request by the finance minister urging people to shun gold won’t do much good in a country enamoured by gold.
An amnesty scheme would have been one of the ways of shoring up foreign exchange reserves but the affidavit filed along with the Voluntary Disclosure of Income Scheme in 1997 bars the government from launching a similar scheme.
Benign inflation figures would have encouraged the Reserve Bank of India (RBI) Governor to cut rates further but inflation in terms of currency depreciation could deter him from doing so. The delay in economic recovery may lead to further non-performing assets that could add further stress to bank balance sheets.
The crippling effect of QE3
(The views expressed in this column are the author’s own and do not represent those of Reuters)
It was tried twice before and it is being tried once again. Whether quantitative easing (QE3) will increase employment in the United States is questionable. But it will certainly disturb currency exchange rates of emerging market economies with related consequences.
QE3 could boost Nifty to 5,550-5,600 in the short term
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Indian markets have been buoyant since the European Central Bank’s decision on the unlimited sovereign bond buying program announced last week and the German Constitutional Court’s nod on Wednesday for the same.
Two problems, one strategy for both RBI and the Fed
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The Reserve Bank of India and the U.S. Federal Reserve were confronted with two different problems but used the same monetary strategy for solution. Neither succeeded.
