FII interest in Indian bonds to rise post RBI policy: CLSA

Chris Wood, CLSA says RBI's move last week to cut rates was long overdue given the surge in real interest rates in recent months.

According to him, it is also positive that the government bond market has been further opened up to foreigners and that the statutory liquidity ratio (SLR) will be gradually reduced for banks.

He says foreigners will want to buy more Indian bonds given RBI Governor Raghuram Rajan's new inflation targeting regime, based on CPI, while the relaxation in the SLR should create more room for banks to lend.

The final positive is that the rupee did not weaken on the 50 bps cut, says Wood.