We may see extension of bond rally: Nomura India

As expected Reserve Bank of India (RBI) kept key policy rates unchanged. It sounded overall dovish, bond yields fell by about 8 basis points (bps) yesterday after the announcement of the policy. In an interview with CNBC-TV18, Vivek Rajpal, Rates Strategist at Nomura India shared his views and readings on the same.

I don’t think RBI was dovish. RBI was hawkish but it was definitely less hawkish than what markets was pricing in. Most importantly, it kept its stance neutral and there were some fears in the market that they may change their stance from neutral to tightening mode, so that provided relief, he said.

I think the bond rally will continue because of two reasons; one is we will see the extension of what we observed yesterday and two is overnight the fall in oil prices also should support India bonds today. So we may see the extension of the rally that we observed yesterday, he added.

For full interview, watch accompanying video...