Having voted the Greek referendum with an absolute "No", citizens might have increased a possibility of Grexit, but this would not affect the Indian market. The 10-year government bond will be in the levels of 7.78-7.85 , in near term on the back of ‘good micro-numbers’ says Ashutosh Khajuria of Federal Bank.
Read more: Greek woes won't impact mkt; India story strong: Edelweiss
He is of the view that US yield curve may not be replicated by Indian bonds but a volatile movement is expected which would impact the equities "4-5 basis points (bps), at worse".
Below is the edited transcript of Ashutosh Khajuria’s interview with Reema Tendulkar and Nigel D'Souza on CNBC-TV18.
Reema: Your expectation on how the rupee will pan out not just today but over the next few days?
A: The RBI may not have any issue with 63.90 per dollar levels to support dollar as there has been buying at those levels. Now that it has strengthened 0.40-0.50 paisa beyond that I think there is likelihood that even if it depreciates a bit half a percent to 0.75 percent or so, inching towards 64 per dollar there may not be much of an external intervention happening there. Just to control volatility on both sides, you may find some selling and buying done by banks on behalf of RBI.
Nigel: What about bond yields? Reema was just telling us that in fact the US bond yields they have cooled from around 2.39 percent to around 2.29 percent. How will our own Indian bonds react do you expect a lot of mind to move towards the Germans Bunds as well?
A: US yield or their curve may not be replicated in India because that is clear cut the case of safety and because any trouble happening in Greece would result in more and more people moving to US Treasury. But then that the need would provide a sentiment to Indian bonds also who have been chasing US – for sometime so you may not find much of a movement happening on the bond side because Indian macro numbers are quite good. So I don’t see much of it happening in Indian market though while opening there could be a volatile movement of 4-5 basis points but thereafter it should stabilise.
Reema: In the near term where do you see the 10-Year? It closed at levels of 7.8 on Friday?
A: I see it in a range of about 7.78-7.85 for the near-term.
Also Read: Pre-opening: Is Greece no vote good news for Indian market?
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