Archive for the ‘ Interest Rates ’ Category

Budget 2014 – Containing Fiscal Deficit

Wednesday, July 9th, 2014

invest in india

India is the 10th largest economy on the planet and one of the fastest growing economies. However, it
has a public debt-to-GDP ratio of 49.6%. The interest burden is quite high and can be seen every year in
the budget. But overall, India is currently in a better position than most countries in the world. It has a
new government which is supported by an overwhelming majority of people nation-wide. Following are
some economic indicators which tell us the current economic condition of India:

• Inflation at 8.28% (as per CPI)
• Rising unemployment
• Downtrend in savings as a % of GDP due to negative real returns on savings
• Inelastic demand for imports (oil and gold)
• Rising factor costs due to inflation
• Expected growth at around 5-5.9%
• 10 year Govt. bond yield 8.71%
• High interest rates and therefore, high costs of capital

Read the full report Budget 2014-15


Identifying Opportunities in the Debt Mutual Funds

Tuesday, January 21st, 2014

Fixed Income Investments serve to diversify your portfolio, help to stabilise your over all return and create a predictable income stream to support your desired lifestyle.

Bonds can provide excellent Risk-adjusted returns. Let’s evaluate where we should invest in the current market scenario.

  • The 10 year G-sec Yield has cooled off to 8.52% after moving above 9% last month.
  • Largely led by primary articles, Inflation at both wholesale and consumer levels have shown a large down-tick.
  • On Account of fall in food inflation the Retail inflation dropped to 9.87% in December.
  • WPI fell to 6.16% the lowest level of Inflation in last 5 months.
  • The fall in inflation is in line with RBI expectations.
  • For the month of January the inflation number may come even softer driven by further cut in agri inflation and base effect.
  • The Inflation data coupled with weak demand and possible fiscal cuts may signal a plateau for interest rates.Please go through the movement of Yields in last few days.


Understanding RBI Steps to Arrest Rupee Decline

Saturday, November 16th, 2013


The RBI Governor had a Media Briefing on last Wednesday. The Governor tried to calm market fears on major two issues. One, the Impact on the Rupee as the Oil Marketing Companies (OMCs) Dollar Demand is back into the market and Second the concern on RBI Policy rates.

The Key takeaways from his briefing are as below:

  • The Governor Expressed satisfaction on the fact that the trade deficit has been quite in control and he estimated current account deficit at USD56 Billion for the current year. This estimate stands USD32 Billion lower than last year and well under 3% of the GDP. The Exports over the last five months have been growing in double digits. Additionally RBI has already raised USD 18 billion through recent initiatives of FCNR (B) and banking capital.