Market welcomes India’s large-scale economic stimulus measures

Original title: The market welcomes India’s large-scale economic stimulus measures

investmentZheheAnalystMost of them appreciated the unexpected economic stimulus plan announced by Indian Prime Minister Modi. thePlan sizeRs 20 trillion, equivalent to IndiaGDP10% of the total.

a bunch ofmarketParticipants noted that the scale of this plan is surprising and will increase the confidence of Indian investors and provide support for the rupee. But it is necessary to clarify some details, especially the way in which this plan will be financed.

Singapore’s NSE-Nifty 50 index rose on Wednesday morning, whileAmerican dollar-A month without rupeesprincipalDeliveryAheadForeign exchangeTrade fell.

The following are analysts andeconomistSummary of views:

Ambitious reforms

Citi India economists Samiran Chakraborty and Baqar Zaidi said the scale of this plan exceeded market expectations, and now everyone is waiting for the details of the plan. The government is very likely to announce the additional financing at the same time as the Bank of India announced.Open marketOperation; it can be throughcurrencyPolicies andfinancialA combination of policies to borrow directlycurrencyChange. The Indian Prime Minister decided to implement ambitious reforms aimed atEarth,work, Agriculture, legal and administrative systems and infrastructure. Once the reform is complete, India will significantly increase productivity. Of course, there is a big problem with the financial system.Structural reformIt is also urgently needed. Certainly, these nationally oriented reforms should be welcomed, but in terms of foreign trade, India is likely to show protectionism in the near future, because it is currently trying to become more self-sufficient.

Inject trust

Gaurav Saroliya, Director of Macroeconomic Strategies at the Oxford Institute for Economic Research, said that in addition to the loose monetary policy of the Central Bank of India, other parts of the plan will also greatly boost market confidence. We previously hoped that blocking the epidemic would reduce India’s GDP by 6%, and the plan will definitely have corresponding specific measures. Indian stock market andIndian rupeePerformance in March was appalling, reflecting market expectations for the Indian economy. This financial support plan came in a timely manner, because the current valuation of the Indian stock market is not only historical, but also low compared to countries outside of Asia and Japan.

Support Rupee

FengyeBankCurrency strategist Takasaki said the dollar / rupee is likely to trade between 74 and 77 in the coming weeks. This stimulus plan will provide support to the rupee.

Financing problems

MizuhoBankEconomy and strategy in SingaporeSupervisorVishnu Varathan said it is clear that the economic stimulus plan announced by Indian Prime Minister Modi “GDP 10%” is more exciting than the previous plan, which was only equivalent to 0.8% of GDP. However, details are unclear at this time. It is not known whether this plan includes previously announced liquidity support measures equivalent to 2.5% of GDP announced by the Bank of India. And it remains to be seen how the plan will be passed across industries. How to plan financing is also attracting market attention.

Focus on the incremental part

German bankIndia’s chief economist Kaushik Das said the “10% GDP” economic stimulus plan should include the liquidity stimulus measures previously announced by the Central Bank of India and the fiscal stimulus measures announced by the government. on March 26 (scale of 1.7 trillion rupees, equivalent to 0.8% of GDP). Therefore, we must pay attention to the incremental part.

Jefferies GroupvaluesAnalysts Mahesh Nandurkar and Abhinav Sinha said the “10% GDP” economic stimulus plan sounded exciting, but except for the previously announced measures, the actual incremental share was just Rs 10 trillion, equivalent to 5% of GDP. .

(Editor in charge: DF524)