US Federal Reserve's announcement to extend monetary situmulus and keep interest rates near zero is expected to augur well for the Indian economy, as the excess liquidity generated is likely to increase the capital inflows in the country. Experts also feel that the rupee is likely to strengthen while gold prices may also inch up.
"The direct impact of the stimulus will be in terms of sentiments which will turn positive and it will be good for emerging economies such as India," said Arun Singh, senior economist, Dun & Bradstreet (D&B) India. "Indian economy is likely to see increased capital inflow as the government's recent steps in economic reforms will send positive signals to the overseas investors," he said.
India may also see its balance of payment improving as exports may also improve. "Monetary stimulus will boost Indian exports as monetary stimulus will ensure that US economy does not slows down further and demand for goods and services remains firm," said Madan Sabnavis, chief economist, Care Ratings.
He expects rupee to be in the range of 53-55 against dollar by the end of March 2013 while D&B expects rupee to near 51 against greenback by December 2013.
Additional liquidity will also push gold prices up, said experts.