The Reserve Bank of India (RBI) is expected to hike rate by 25 bps in the next credit policy, a top Market Strategist of JP Morgan said in Mumbai.
"Currently the RBI is being very considerate in its response to monetary policy, in its response to the high level of cost-push inflation. We do expect the repo rate to go up by 25 basis points (bps) at the next meeting but that is a very modest increase, relative to India's nominal gross domestic product (GDP) growth," JP Morgan's Chief Asian and Emerging Market Strategist Adrian Mowat told reporters in Mumbai.
Mowat said that the Indian economy should see robust growth and given this, its premium valuations are justified. "India offers a good growth story. We need to put India's valuations into a global context. I find Indian valuations look perfectly appropriate relative to the growth opportunities within the markets," Mowat said.
We are also seeing strong foreign institutional inflows (FII) inflows because they find Indian market offers good growth and the valuations are acceptable, he said. Mowat pointed out that stocks of banks, real estate, IT sector and capital goods sector will perform better.