Bloomberg News

‘Risk Rally’ in Indian Equities May Sustain, Taurus Asset Says

January 24, 2012

Jan. 24 (Bloomberg) -- Sadanand Shetty, a Mumbai-based senior fund manager at Taurus Asset Management Co., which manages about $921 million in assets, comments after India’s central bank cut the amount of deposits lenders need to set aside as reserves for the first time since 2009 and signaled future interest-rate cuts.

Shetty made his comments by phone.

“The Reserve Bank of India is infusing liquidity, which is directionally positive. We needed a baby step to be taken and we will have a cut in interest rates, may be in the next monetary policy.”

On stock markets:

“This rally is basically a risk-rally, which means the stocks that were hammered last year have made a big bounce-back.

‘‘I expect this rally to sustain because the massive gap between last year’s outperformers, like consumer goods and healthcare stocks, and underperformers, like shares of capital goods, metal and real estate companies, has to be bridged.

The BSE India Sensitive Index, or Sensex, rallied as much as 1.3 percent to 16,976.62 after the Reserve Bank of India, or RBI, unexpectedly reduced the cash reserve ratio to 5.5 percent from 6 percent. The decision was predicted by three of 21 economists in a Bloomberg News survey.

On bank stocks:

‘‘Bank stocks have made a very decisive, and somewhat surprising move, which means they are unlikely to go back to their previous lows.

‘‘We’ve significantly increased our exposure to banking over the last one month or so.’’

The 14-member Bankex Index erased early losses and surged as much as 3.2 percent after the central bank announcement. The gauge has climbed 23 percent so far this year, compared with a 9.9 percent gain for the Sensex.

--Editor: Ravil Shirodkar

To contact the reporter on this story: Shikhar Balwani in Mumbai at;

To contact the editor responsible for this story: Richard Frost at

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