ET Now In a chat with ET Now, Amandeep Chopra, Group President & Head - Fixed Income, UTI MF, shares his macroeconomic outlook. Excerpts:
ET Now: What have you taken away from this ratings outlook revision? What does it mean for the markets, currency as well as the bond markets in near term?
Amandeep Chopra: The rating agency has acknowledged the recent macroeconomic changes happening in India. That has been a positive development. These macro parameters include rate of inflation, the direction of fiscal deficit, GDP growth, external trade account and the level of fixed reserves that we have built up over the last 18 months.
We have been fairly optimistic on the change in outlook. It is only a reaffirmation of the macro improvement that we have seen, thanks to combined efforts by both the RBI and the Modi government. So, the markets have taken it very positively. We have seen a little rally today in spite of the disappointment stemming from the slightly hawkish statement from the RBI.
I guess we will see a fairly positive tilt as far as the bond markets are concerned. But it has also been to some extent tempered by the announcement that there is unlikely to be an increase in the FY limits, which clearly in our view would have been a strong driver for a further rally if any in the bond market.
ET Now: Where do you see the rupee going? Also, what is your view on bond yields?
Amandeep Chopra: To me, the base view has really not changed. We still think the repo rate can reach 7%. That effectively means two more rate cuts from here on. From a short-term view, the supply which is going to start with the new G-Sec auctions won't help any rally as far as yields are concerned.
But on the other hand, if you really have a slightly longer-term perspective, RBI has maintained an accommodative monetary policy stance. They have talked of five requirements. That clearly indicates there will be rate cuts. Also, if normal monsoons come through, there won't be any reason to fear any spike in the headline CPI data.
ET Now: What have you taken away from this ratings outlook revision? What does it mean for the markets, currency as well as the bond markets in near term?
Amandeep Chopra: The rating agency has acknowledged the recent macroeconomic changes happening in India. That has been a positive development. These macro parameters include rate of inflation, the direction of fiscal deficit, GDP growth, external trade account and the level of fixed reserves that we have built up over the last 18 months.
We have been fairly optimistic on the change in outlook. It is only a reaffirmation of the macro improvement that we have seen, thanks to combined efforts by both the RBI and the Modi government. So, the markets have taken it very positively. We have seen a little rally today in spite of the disappointment stemming from the slightly hawkish statement from the RBI.
I guess we will see a fairly positive tilt as far as the bond markets are concerned. But it has also been to some extent tempered by the announcement that there is unlikely to be an increase in the FY limits, which clearly in our view would have been a strong driver for a further rally if any in the bond market.
ET Now: Where do you see the rupee going? Also, what is your view on bond yields?
Amandeep Chopra: To me, the base view has really not changed. We still think the repo rate can reach 7%. That effectively means two more rate cuts from here on. From a short-term view, the supply which is going to start with the new G-Sec auctions won't help any rally as far as yields are concerned.
But on the other hand, if you really have a slightly longer-term perspective, RBI has maintained an accommodative monetary policy stance. They have talked of five requirements. That clearly indicates there will be rate cuts. Also, if normal monsoons come through, there won't be any reason to fear any spike in the headline CPI data.
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