Credit Policy: RBI may hold CRR cut for later date: DSP BlackRock

With inflation data in line with market expectations, Dhawal Dalal of DSP BlackRock Investment Managers believes that the Reseve Bank of India will introduce a rate cut in its forthcoming policy meeting.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead Travelcafe
moneycontrol.com

Home » News » Mutual Funds » MF-Interview

Apr 16, 2012, 03.34 PM | Source: CNBC-TV18

Credit Policy: RBI may hold CRR cut for later date: DSP BlackRock

With inflation data in line with market expectations, Dhawal Dalal of DSP BlackRock Investment Managers believes that the Reseve Bank of India will introduce a rate cut in its forthcoming policy meeting.

Like this story, share it with millions of investors on M3

Credit Policy: RBI may hold CRR cut for later date: DSP BlackRock

With inflation data in line with market expectations, Dhawal Dalal of DSP BlackRock Investment Managers believes that the Reseve Bank of India will introduce a rate cut in its forthcoming policy meeting.

Post Your Comments

Share Cancel

Dhawal Dalal (more)

EVP & Head - Fixed Income, DSP BlackRock |

With inflation data in line with market expectations, Dhawal Dalal of DSP BlackRock Investment Managers believes that the Reseve Bank of India will introduce a rate cut in its forthcoming policy meeting.

Unless the central bank surprises the market participants with a larger than expected rate cut, Dalal feels that the benchmark 10 year is unlikely to go below 8.45%. According to him, it will probably remain in a range of 8.45-8.60% in the near-term. 

Below is an edited transcript of Dalal's interview on CNBC-TV18. Also watch the attached video.

Q: How are you reading the inflation data? Does it increase hopes of a rate cut tomorrow?

A: I think the inflation number has been pretty much in line with what market was anticipating. This reinforces the belief that this is the golden window for the RBI to introduce a rate cut tomorrow. After that, further rate cuts will be dependent on the systemic liquidity, current account deficit as well as global oil prices.

Q: What is the movement of the bond prices that you expect tomorrow when the expected rate cut materializes?

A: We expect the government bond prices to remain range bound with a downward bias after the credit policy as the market participants will start focusing on the impending supply, which is on average about Rs 15,000-18,000 crore a week. Given the fact that the bonds have done extremely well from the peak yields of around 8.75%, the benchmark 10 year yield has come down all the way to around 8.45%.

I think from 8.45% there is a very strong technical resistance for the bond yields to fall further. Unless the Reserve Bank of India surprises the market participants with a larger than expected rate cut, we find that the benchmark 10 year is unlikely to go below 8.45%. I think it will probably remain in a range between 8.45-8.60% in the near-term.

Q: Does that mean it will remain at 8.45% even if a rate cut comes?

A: For the moment, it could probably trade slightly below 8.45%. But in my opinion, 8.45% appears to be a good support from a technical perspective.

Q: What do you expect to hear on the CRR front because there has been some mixed opinion? Most of the economists we spoke to are not expecting a cut, but some bankers like SBI believe that the right tool for the RBI to use would be another CRR cut?

 A: Yes, some of the market participants do expect the RBI to announce a CRR cut. But given the kind of improvement in the systemic liquidity in April month-to-date as compared to March, we believe that RBI should probably hold onto CRR cut for later dates.

Also read: 25 bps rate cut will be a non-event, say experts

Ads by Google

Buy, Hold, Sell ? Hear it first on M3
Credit Policy: RBI may hold CRR cut for later date: DSP BlackRock

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login