HALISTER1: RBI to Buy 200b Rupees of Indian Bonds/Mo. Until July: Nomura

RBI to Buy 200b Rupees of Indian Bonds/Mo. Until July: Nomura

(Bloomberg) -- RBI is now expected to buy 200b rupees/mo. of Indian govt bonds until July because of the higher currency in circulation outflows, Nomura analysts including Vivek Rajpal write in note dated May 16.
  • Sees OMOs pausing in Aug. and Sept., as liquidity is expected to turn neutral by Aug.; NOTE: RBI has bought 400b rupees of bonds so far in fiscal 2017
  • Forecasts 900b rupees ($13.5b) of bond purchases in 2H of FY2017, bringing total for full fiscal year to 1.8t rupees
  • Higher-than-expected April CPI is likely to keep rate-cut expectations at bay and to maintain 5-year NDOIS above policy rate; for 5-year NDOIS to break lower, market expectations of terminal rate need to be lowered
  • Remains comfortable with its recommendations of long 8.27% 2020 govt bond, long 8.27% 2020 bond vs pay 5-year NDOIS, and 2s5s NDOIS steepener
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Vivek Rajpal (Nomura Holdings Inc)

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