With FDI pronouncements unlikely and more than $170 bln in debt redemptions due in FY 2014, the more policy makers dither on shoring up FX reserves with bond offerings the more the risk to the currency from flat international trade and eager money flow watchers finding it a tempting investment with a small investment and a big payout in percent returns.
However, it is today (and just today’s trade likely) only that the lackadaisical equity moves still risk a big rupee downside as equities are sustaining a large 6000 level in light of the real reassessment of Indian prospects as a flurry of GDP downgrades continue. The cyclical reinforcement of this downside risk aka in Latam and east Asian examples of the past is unlikely as equities are strong and the depth is likely to see the markets after a good show by HDFC Bank yesterday and a likely par for the course from TCS this morning.
Though longs would have to wait for their time , further shorts in this market esp on the banks are unlikely to bear fruit. The money market investments made through mutual funds amount to an expected INR 1.6 Trillion and the Central Bank has immediately provided a reserved window of liquidity for these mutual funds to a sizable INR250 Bln as redemption pressure resumed on Monday/Tuesday. Yields hit 85 on Tuesday market open in the short term instruments but rbi lending to banks is at a minimum of 10.25%
With Foreign banks also reducing their footprint in light of Global Banking regulation of Capital and ringfencing, which exactly are wholesale players in India in the non PSU, well managed banks!! HDFC also reports today and axis a 4%+ margin again on its retail portfolio strength
- India Morning Report: GDP forecasts look for their pound of flesh, india inc reports (This week in Asia on The Banking and Strategy Initiative: advantages.us) (awardz.wordpress.com)
- India Morning Report: FDI flows bolstered in 13 sectors including Defence and Telecom (awardz.wordpress.com)
- Indian shares‚ rupee rise after govt FDI push (thehimalayantimes.com)
- Rupee impact: The Free fall continues, small snag on equities (awardz.wordpress.com)
- India Morning Report: Rupee crosses over into 2014 range, Growth cycle pumped up? (awardz.wordpress.com)
- RBI opens new attack to clamp rupee free fall (moneycontrol.com)