Indian markets likely to be volatile this week: India Ratings
Indian markets are likely to be volatile this week as two central banks will announce their monetary policies, said India Ratings and Research in a press release on Monday.
Both the Bank of Japan (BoJ) and the US Federal Reserve are scheduled to review their monetary policies on Wednesday.
According to India Ratings and Research, the US Federal Reserve is unlikely to hike rates in this week’s policy, but may signal imminent rate normalisation in the near-term.
However, the Fed may signal confidence in the underlying recovery with explicit communication to prepare financial markets for the potential rate action before the end of 2016.
The recent spate of data releases (growth and inflation numbers) may encourage the US Fed to take the opportunity and prepare ground for a potential rate action in the near future, cited the ratings agency.
The monetary policy decision of Bank of Japan (BoJ) will come against the background of ongoing negative rates and quantitative easing programme conundrum. Even though the bank has maintained an ultra-easy policy programme, both growth and inflation have remained elusive, while the yen has retained strength, it said.
The ratings agency has stated that policy alternatives over the future course of action will keep the global markets circumspect ahead of the announcements.
The latest retail inflation and industrial output data is apt for the debt market in India.
“Domestic economic conditions augur well for the debt market; the fall in retail inflation coupled with weak industrial recovery accentuates the need for undertaking growth boosting measures,” India Ratings said.
India Ratings has said that the bond market movement in the near-term will be a function of outcomes of the Fed and BoJ policies, as risk appetite will remain a major determinant of yields.
On the rupee front, the ratings agency said, “A status quo decision coupled with hawkish rhetoric from the US Fed is likely to weigh down risk appetite, and the rupee be pushed on the defensive.”
“Additionally, with upcoming $26 billion FCNR B (foreign currency non-resident) redemption, the rupee is poised to withstand any imminent volatility better than the previous episodes as strong forex reserve accretion ($371.3 billion) gives the Reserve Bank of India (RBI) the cushion to manoeuvre and anchor rupee movement,” it further said.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Tamil Nadu Weather Alert: Chennai may receive heavy rains; IMD issues yellow & orange alerts in these districts
SIP vs PPF: How much corpus you can build in 15 years by investing Rs 1.5 lakh per year? Understand through calculations
SIP+SWP: Rs 10,000 monthly SIP for 20 years, Rs 25 lakh lump sum investment, then Rs 2.15 lakh monthly income for 25 years; see expert calculations
Top 7 Mutual Funds With Highest Returns in 10 Years: Rs 10 lakh investment in No 1 scheme has turned into Rs 79,46,160 in 10 years
SBI Senior Citizen Latest FD Rates: What senior citizens can get on Rs 7 lakh, Rs 14 lakh, and Rs 21 lakh investments in Amrit Vrishti, 1-, 3-, and 5-year fixed deposits
04:43 PM IST