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Fixed Income

Rajan Welcomed Well By Equity and Dollar, Bonds Don’t Like Him

The entry of Dr. Raghuram Rajan has taken the Nifty up 7%, and the bank nifty up over 12% from its lows. The Nifty is now touching the 50 day moving average.

Nifty Snapshot

(Click for larger picture)

The recovery came in on Thursday and Friday. Banks were up nearly 10% on Thursday, with a great follow up day on Friday.

However, this could still be a temporary move, as the US data shows a taper in US bond buying is much more likely now.

While equity markets rejoiced, bond markets didn’t. The two days of the new RBI governor have seen rising rates:

 

10 yr bond movement

And the dollar has improved dramatically:

image

(While this is the RBI ref rate which is fixed at 12 noon, the end day rate was even further lower at 65.)

The next week is shortened (with a Monday holiday in India) but will see both IIP and inflation released, and Import-Export data too. Will Rajan’s good run continue?

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