Keeping its Sensex goal for the March 2017 unchanged at 30,000, Wall Street brokerage Morgan Stanley right this moment mentioned the impact of a US Fed rate hike appears to be turning into much less related for the home market.”In the context of the nation’s macro stability right this moment that danger (Fed) is much less related to India. We are fairly snug and in reality that is the primary time because the liberalisation 25 years in the past that India has minimize charges in opposition to a Fed rate hike (Fed had hiked charges final December however RBI has lowered charges since then),” Morgan Stanley India Equity Strategist Ridham Desai informed reporters right here.
“This is a manifestation of the strength of our external balancesheet. We never had the courage to go against the Fed in the past. And our base call is that this will happen the second time when RBI cuts interest rates as against a hike by US Fed,” he added. The Fed is anticipated to jack up charges on the December FOMC assembly.
Besides, Desai mentioned whereas demonetisation will have some destructive impact on the Indian financial system within the brief time period, the state of affairs appears constructive in the long term.
“Demonetisation is not a serious issue. People are making a big deal out of it. If there will be a problem in the economy why to think there will not be any response from the policymakers and RBI?” he requested.
While noting the transfer will assist banks develop deposits, liquidity in addition to carry them in higher place to give loans and rates of interest will fall, Desai mentioned, “Of course, there is a negative impact in the short run but it not as large a negative impact as it is being made out to be.”
He noticed that 13 per cent of India’s GDP is circulating as money of which a bulk is transactional money and never black money. “Most of us like to deal in cash and not electronically. This is a shock that the system has got to accelerate towards digital economy.”
Interestingly, Desai mentioned GST would have a a lot bigger implication on unaccounted cash in contrast to scrapping of excessive worth notes.
“GST is a complicated challenging task. There is a execution challenge…this is the biggest tax law change in the history of the world,” he famous and added there’s a chance of a rise in banking penetration due to demonetisation in addition to enlargement of digital means for transactions.
Earlier within the 12 months, Morgan Stanley had mentioned it anticipated the Sensex to regain its life-time excessive of 30,000-mark in a finest case state of affairs by subsequent March.
The 30-share BSE benchmark right this moment gained 91 factors to shut at 26,051.81. PTI SSM BEN RSY MR RDS 11232103