India Fixed Income Report – July 11, 2012

As expected the RBI auction of T bills till 364 day duration as a great success , yields falling by 6 basis points on average to 8.22% on the 90 day bill and 8.06% awarded on the 364 day Bill, mopping up INR 100B

The liquidity condition seems likely to stay at levels  that generate confidence irrespective of continuing deriding of economic data and habutuating indian to a higher inflation in the first part fo the recovery,.. The Rupee is finally trying to come back from 55.5 levels in the July series after falling thru like a brick in yesterday’s correction but is likely to son return to the larger corrective path like the Singapore Dollar and the Won which have also corrected to 1.28 and 1160 levels when Rupee fell to 56.5 earlier.

Equities are going to return the most bullish as returns from bond yields going down fuel credit growth and consumption, the only requirement being that the right policy nudges are not broken again in the next 2-3 months 

Credit growth from Top 5 banks could score more than 25% in the Q2 results season on going right no and groth remains channeled thru NBFC lending

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