Easing in India

The RBI came out yesterday with its second consecutive rate cut as economic growth starts to cool amid the ongoing general elections. The political desire for stimulus is understandable in the investor community, especially at a time when the rupee has stabilized and inflation is low. While we expect some rupee weakness to return, the growth picture is relatively attractive versus Emerging Asia. The narrative of China’s growth stabilization appears less than solid (see: “China’s glimmer of growth”, April 4th), leading us to prefer the resilience and homegrown nature of the Indian economy and its equity market. Lower UST yields should continue to support an outperformance of Indian equities.




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