Vivek R Misra, Strategist- Asian Equities, Global Research & Strategy at Societe Generale believes that Reserve Bank of India (RBI) is likely to cut rates in Q4 of FY15. Federal Reserve's decision of keeping the rates unchanged is likely to weigh a bit on this and that could push the rate cut a bit forward. He expects 25 basis points (bps) rate cut by RBI in Q4.
Below is the transcript of Vivek R Misra's interview with Nigel D'Souza and Ekta Batra on CNBC-TV18.
Ekta: What is your sense in terms of how Indian equities could react today?
A: We are in the camp that believes that there should be a rate rise in 2015 and we believe that as far as the equity market is concerned, probably the worst is passed, so it may take a bit of time we expect that by October end. Volatility should be lower than where it is right now.
Nigel: So we have not got that Fed rate hike that the market was factoring in. Do you believe the Reserve Bank of India (RBI) is going to go ahead, cut rates at the end of this month and also you were talking about nibbling into stocks, do you think now you will go on for a larger bite?
A: As far as the rate cut decision by the RBI is concerned, we believe this is likely to be in Q4. Having said that, the Fed decision is likely to weigh a bit on this and that could push the rate cut a bit forward. As far as the stocks are concerned, I do think that next quarter is going to be a good time to buy stocks. You are likely to see a risk rally over the next two quarters or so.
Ekta: What might you be factoring in from the RBI and would that be the next trigger or do you think that too is factored into the markets?
A: We are factoring in 25 bps rate cut by the RBI in Q4.
Ekta: Q4 means you don’t expect a rate cut on September 29?
A: Not in a central scenario. We expect it to be in Q4. What we do expect is that the Indian equities should rally basically because some risk appetite is going to come back in, volatility in global equities is likely to die down.
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