Rising bond yields in the US could lead to capital outflows from India, NDTV Profit reported citing Jefferies' Greed and Fear report.
The brokerage firm also noted that the US stock market still has room to rally on the expectations of pro-growth policies under the presidency of Donald Trump.
It also said that the policies of the US president could boost US dollar and put pressure on the rupee. On November 14, the currency continued its downward trend as it depreciated by 7 paise to close at an all-time low of 84.46 against the US dollar, weighed down by unabated foreign fund outflows and strong dollar demand from investors.
Forex traders said the downward pressure on the USD/INR pair is largely driven by persistent inflation and significant foreign fund outflows.
On China, Jefferies predicted that the stimulus measures announced by the second-largest economy in the world could push demand and provide greater opportunities for Indian firms.
Meanwhile, the brokerage firm, in another report, said that Trump’s trade war with China could ease if Beijing decides to move some of its manufacturing units to the US.
The communist nation could renegotiate a new deal with Trump, which could include a willingness to move production to its biggest rival.
With agency inputs
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