HALISTER1: Stay Long India Bonds for Carry, Outlook Positive: StanChart

Stay Long India Bonds for Carry, Outlook Positive: StanChart

(Bloomberg) -- Key positives for govt bonds are stable economic growth, subdued inflation expectations and improving fiscal & current account deficits, Nagaraj Kulkarni and Arup Ghosh, analysts at Standard Chartered, wrote in note dated yesterday.
  • Estimate RBI OMO purchases at 1.3t-1.5t rupees for FY17; this implies aggregate federal govt bond demand of 100% - 114% of supply
  • Combination of better liquidity conditions, increased RBI demand for govt bonds and more stable overnight rates as positive
  • Flags frequency of OMOs in 1H FY17, monsoon rains and foreign inflows into govt bonds as near-term uncertainties
  • Recommends buying 8.27% 2020 bond with target at 7%, stop- loss at 7.50%; last traded at 7.37%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Arup Ghosh (Standard Chartered PLC)
Nagaraj Kulkarni (Standard Chartered PLC)

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