Foreign Exchange
The confidence in the rupee remains strong: stronger against the U.S. dollar
and Japanese Yen but weaker against the Euro and Pound Sterling. Against a
basket of 36 currencies, as of end September (data as of end October is not still available), the rupee was stronger by 2.5% over the preceding eleven months.
Indian equities have put in a super performance – the
benchmark Sensex is up by more than 20%! Although corporate earnings have been
weak on the back of a significant slowdown in the economy, equities have been the best performing
asset class. Equities generally factor in expectations of the future, so it
seems that the equities market is projecting that demonetisation, GST, and
various other measures of the government are going to be net positive for the
long term growth of the economy.
The picture on bonds is interesting. Bond yields have fallen
up to 3 years, but risen slightly from 5 to 10 years – so that the yield curve
has steepened. This seems to support the view from the equities market that the
long term growth of the economy has not been jeopardised by demonetisation and
GST. On balance, the bond market has returned a positive return over the last
year.
Gold has generated a negative return as a result of the
stronger Rupee (against the U.S. dollar).
RBI continued with its accommodative monetary policy
post-demonetisation but then shifted gear to a neutral stance in Fenruary this year.
SBI and ICICI Bank – the
largest in the public and private sectors – reduced deposit rates, but unlike
the government bond market, more in long term deposits than in short term
deposits. Significantly, both banks reduced their S.B. account rate by 0.5%, the
first such change since deregulation in 2011.
There has been a significant reduction in SBI's rate.
Real Estate
very useful at a glance and updated!
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