Moneycontrol Bureau9:55 am RBI action: A CNBC-TV18 poll of economists says 95 percent expect repo rate to remain unchanged, while 5 percent expect a 25 basis point rate cut.
Indranil Sengupta, Chief Economist - India, BoFA-ML, is among the 5 percent who expect the central bank to cut key interest rates.
"There are strong fundamental reasons for a rate cut," he told CNBC-TV18, adding that he expects inflation to come down to RBI's 5 percent March target on back of good monsoons.
He maintained that growth is weak and that reflects in poor loan demand. "An RBI cut will help bank cut lending rates," he said, adding that if the RBI cuts now before the busy season, it would allow banks to pass on the cut.
9:45 am Masala bonds adding spice? With two companies raising Rs 5000 crore via offshore masala bonds in the last month, global ratings agency Fitch has said it will help diversify funding for India Inc, especially non-banking finance companies.
"The recent issuance of the first offshore masala bonds by domestic companies could pave the way for a broader opening and development of the market," the agency said today in a note.
Even though the instrument is in its infancy, the two recent issues by mortgage major HDFC and state-run NTPC will mitigate initial market concerns about liquidity, it said, adding the issuance also helped both the companies get better ratings.
The bond pricing was surprisingly competitive relative to onshore funding considering uncertainty over liquidity and currency risks, it said, adding this will prod other corporates to go to the market.
9:30 am FII view: Timothy Moe of Goldman Sachs says Asian equities have rallied 10 percent and seen USD 17 billion FII inflows since the Brexit lows.
History suggests the current rally looks mature in terms of price moves/inflows.
However, active managers look under-exposed and may be forced near term to chase the market, according to him.
Moe says he sees draw-down risk if fundamentals do not improve, adding India remains the largest overweight in the region but funds have pared down their overweight allocations to reasonable levels.Don't miss: Investment strategies: 6 stocks that you can buy or sell
The market has opened flat as investors prepare for Raghuram Rajan's last monetary policy review in few hours. Outgoing governor Raghuram Rajan is not expected to tinker with rates as he presents his last monetary policy today. According to a CNBC-TV18 poll shows attention has moved from rates to liquidity, 70 percent of the respondents expect him to keep liquidity at current excess.The Sensex is down 11.07 points at 28171.50, and the Nifty is down 6.70 points at 8704.65. About 508 shares have advanced, 327 shares declined, and 40 shares are unchanged.
Lupin, Tata Motors, ONGC, M&M and Coal India are top gainers while Bajaj Auto, TCS, Hero MotoCorp, Reliance and Infosys are losers in the Sensex. Idea is down 4 percent post Q1 results.The Indian rupee opened flat at 66.84 per dollar versus previous close 66.84.Ashutosh Raina of HDFC Bank said, "The Reserve Bank of India (RBI) is widely expected to maintain status quo in today's credit policy, but the statements following the policy will be keenly analysed. Any roadmap on the upcoming FCNR redemptions, and steps to ensure adequate dollar as well as rupee liquidity will be keenly awaited."The dollar held on its gains against Japan's currency, after strengthening the most in 1.5 weeks yesterday.
Asian shares stood atop one-year peaks as a desperate search for yield drove a record inflow into emerging market funds, while oil prices tried to sustain their latest bounce. Analysts at Bank of America Merrill Lynch noted the search for yield had led to the largest 5-week inflow on record to emerging market debt funds and the longest inflow streak to equity funds in two years. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent having already risen for three sessions in a row. Japan's Nikkei was also attempting a fourth session of gains with an early rise of 0.1 percent, while South Korea firmed 0.2 percent.
Wall Street receded from record highs as a drop in healthcare stocks offset gains caused by higher oil prices and a strong jobs report. A rally to several all-time highs since late June has left the S&P 500 up nearly 7 percent in 2016, with many investors concerned about stretched valuations.
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