• Market Outlook
  • Asset Allocation
  • Investment Team
  • Investment Philosophy
  • Rupee Cost Averaging
  • Economic Indicators
  • Market Outlook
  • Asset Allocation
  • Investment Team
  • Investment Philosophy
  • Rupee Cost Averaging
  • Economic Indicators

EQUITY

FIXED INCOME

Review:

In line with market expectations, RBI cut the repo rate by 25bps to 7.25%. It also signaled comfort with the existing level of liquidity by leaving the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) rates unchanged. RBI expressed concern on inflation risks from a likely poor monsoon, potential spike in crude prices, and volatility in external environment. The central bank’s view of both growth and inflation has worsened somewhat. It now sees FY16 growth to be 7.6% (from 7.8% earlier), while expects inflation to bottom out in August and rise to 6% in January (earlier forecast was 5.8%). The RBI is also keen to see further transmission of its policy accommodation, and is leaning on banks to cut lending rates further. The Index of Industrial Production (IIP) for the month of March was seen at 2.1% as compared to 4.9% in February 2015. Consumer Price Index (CPI) eased to a four month low of 4.9% in April as compared to 5.3% in March. Indian Rupee depreciated against the dollar to close at 63.83 as on 29 May 2015.

Outlook :

We have a neutral to cautious outlook on fixed income portfolio over short term. While the sub-par monsoon is a risk factor, we need to take note of the fact that if global food prices remain benign and government continues to undertake pro-active food management policies, then inflation can continue to remain soft. We continue to expect RBI to ease the rates further in the current fiscal year.