India does not need a devaluation of rupee for now, says Rajeev Malik, senior economist at CLSA. At this point currency devaluation could be a costly affair. It may spook investors and may impact capital flows. The government is considering a proposal for a weaker rupee in an attempt to make it more competitive. According to a Reserve Bank of India report, rupee has been over-valued by 10-12 percent. This may be an attempt to make Indian goods more attractive to foreigners as they would become cheaper. This will boost export compeitiveness. Instead, focus should be on productivity gains and enhancing structural competitveness, says Malik. This will increase export volumes and will help exchange rates.
"If Make in India and ease of doing business initiatives of the government are doing as good as they are reported to be, they should have already led to a boost in exports,"
RBI is sure to cut rates at least once before the end of year, he says. Inflation may come down further, but RBI is going to focus on a sustained inflation profile
Nifty scale 5-digit mark shortly;like RIL, infra
Indian market started on an ominous note but came out unscathed by the end of the trading week. It continued to consolidate. The 30-share BSE Sensex was up 186.14 points at 28599.03 and the 50-share NSE Nifty gained 37.30 points at 8779.85. The Nifty failed to hold the psychological 8,800 level.
we are currently in a fabulous bull market and there is lot of action beyond the Sensex and Nifty. He does not think the Indian economy and fundamentals are co-related to global events.