With the the fall in global commodity prices over the past month, investors have been adding to their positions in India. Majority of investors were slightly overweight India.
Rate cut the Only Silver Lining
The current rally in the market could be attributed as investors position themselves for a faster than consensus rate cut led by (a) inflation falling faster than expected. The WPI data today at just under 5% has borne out this view (b) falling oil and gold prices helping ease the current account deficit worries (c) expectations that the change of RBI Governor would lead to faster rate cuts. Our analysis indicates that there is no clear (more…)