India May trade deficit seen rising to $21 bln: Nomura

Moneycontrol Bureau

Brokerage house Nomura expects India's trade deficit to widen to a record high of USD 21 billion in May, compared to USD 17.8 billion in April. Nomura analysts say a repo rate cut by the RBI at its monetary policy review meet next week looks unlikely.

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"First, the trade deficit has historically worsened sharply in May from higher chemical and fertilizer imports. Second, gold demand was elevated in May, as about 162 tons of gold were imported. Lastly, external demand has been sluggish," said the Nomura note to clients.

The brokerage sees trade deficit improving in June, but the steep rise in April and May could keep the CAD for the quarter at 5.5-6.0 percent, compared to 4.0-4.5 percent in the April quarter.