Halister News

(Bloomberg) -- Societe Generale recommends receiving India’s 1-year non-deliverable overnight-index swaps and simultaneously paying 5-year NDOIS at a spread of 31bps, strategist Amit Agrawal writes in note Wednesday.

• Target at 61bps with stop-loss at 16bps; trade horizon 2 to 3 months
• Impact of demonetization hasn’t been reflected in inflation yet, and RBI should further ease interest rate by 25bps in 2Q despite the central bank’s shift in stance to neutral from accommodative
• If GDP growth bottoms in coming quarters, the spread between 1yr and 5yr rates should move higher
• Long end of INR yield curve likely to be driven up along with higher U.S. yields
• The lack of demand in INR fixed-income assets from foreign investors, higher oil prices and higher state-development loans add to upside to Indian yields