Future Challenges ... Nifty
The combined effect of the 3 challenges below should impact the current blue sky scenario. Interest rates in the wholesale market should increase by 50bps, possibly 100bps.The trade-off in policy making to manage these challenges should lead to multiple blind spots having sector and stock impact.
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The combined effect of the 3 challenges below should impact the current blue sky scenario. Interest rates in the wholesale market should increase by 50bps, possibly 100bps.The trade-off in policy making to manage these challenges should lead to multiple blind spots having sector and stock impact.
- Risk of Rs. 70/ USD is live and ignored: We completely reverse our contrarian INR appreciation view for the past 3 years as its fundamentals are weakening sharply. Both Current account and Capital account look dicey due to multiple challenges; Overvalued REER and likely inflation trajectory could lead to bond FII outflows and yield spike.
- Fiscal slippage or spending cuts by Centre & States even without reckoning the GST black box.
- Inflation rebound: GST impact, especially on services, mean reversion in food inflation, high MSP increase in agricultural commodities, an uneven rainfall distribution and Pay Commission effect can lead to 6% CPI by June’ 18.
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