Bloomberg News

Nomura’s Rajpal Says India Bonds to Gain After RBI Signals Pause

October 25, 2011

Oct. 25 (Bloomberg) -- Vivek Rajpal, a Mumbai-based fixed- income strategist at Nomura Holdings Inc., Japan’s biggest brokerage, comments on the outlook for India’s bond market.

The Reserve Bank of India raised the repurchase rate to 8.50 percent today from 8.25 percent and signaled it’s nearing the end of its record cycle of increases as the economy cools. Eighteen of 28 economists surveyed by Bloomberg News survey predicted the decision, with the remainder forecasting no change.

“The RBI is more dovish than what the market expected, and they have brought growth concerns to the fore. The interest-rate swap curve should bull steepen now that the RBI is indicating a pause.

“Since the RBI has clearly mentioned it will ‘manage liquidity to ensure it remains in moderate deficit,’ I expect them to conduct open-market operations at the end of November or early December when liquidity conditions will be outside the comfort zone. So bonds should rally on expectations of open- market operations. The bond yield and repurchase rate should converge on expectations of a pause.”

--Editor: Andrew Janes

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at

To contact the editor responsible for this story: Sandy Hendry at

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