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INDIA: Stocks Extend Recovery as Modi Finds Coalition Support

INDIA
BulletEM BulletEmerging Market News
  • Indian assets have found greater stability today following some turbulent post-election sessions this week. Prime Minister Modi looks set for a third term in power after two key allies pledged their support to form a new government, aiding the sustained recovery in local equities.
  • The Nifty and Sensex indices have recorded moderate gains today, while USDINR stands 0.1% higher but well within this week’s ranges.
  • For USDINR, the pair is above the 20- and 50-day EMAs, averages which the pair has traded on either side of this week. Topside focus remains on May’s all-time high of 83.5750, while a clear break of Monday’s low of 82.9512 could instead bolster bearish sentiment. However, analysts continue to flag that RBI intervention is likely to limit USDINR momentum in either direction.
  • Domestic focus shifts to the RBI rate decision tomorrow (05:30BST/10:00IST), where none of the 34 economists polled by Bloomberg foresee a shift in policy. This is also our strong bias, which if realised, will see the policy rate held 6.50%. Rate cuts for India are seen more towards the end of this year, rather than a near term risk. Our full preview of tomorrow’s decision can be found here.
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  • Indian assets have found greater stability today following some turbulent post-election sessions this week. Prime Minister Modi looks set for a third term in power after two key allies pledged their support to form a new government, aiding the sustained recovery in local equities.
  • The Nifty and Sensex indices have recorded moderate gains today, while USDINR stands 0.1% higher but well within this week’s ranges.
  • For USDINR, the pair is above the 20- and 50-day EMAs, averages which the pair has traded on either side of this week. Topside focus remains on May’s all-time high of 83.5750, while a clear break of Monday’s low of 82.9512 could instead bolster bearish sentiment. However, analysts continue to flag that RBI intervention is likely to limit USDINR momentum in either direction.
  • Domestic focus shifts to the RBI rate decision tomorrow (05:30BST/10:00IST), where none of the 34 economists polled by Bloomberg foresee a shift in policy. This is also our strong bias, which if realised, will see the policy rate held 6.50%. Rate cuts for India are seen more towards the end of this year, rather than a near term risk. Our full preview of tomorrow’s decision can be found here.