COVID-19 has changed the world’s macroeconomic perspective. The fear of the pandemic has brought historic volatility and mayhem in global and Indian markets, affecting investors’ confidence. However, economists feel despite bloodbath in Indian markets, the economy may benefit in days to come. They hold optimism on three grounds, despite the turmoil.
Crude Oil
The crude oil, which has gone down $20 per barrel, is a blessing in disguise for Indian economy. As, when every barrel per dollar comes down, it results in a benefit of Rs 12,000 crore for India, This way we are saving the foreign currency outflow. Hence fall in the crude oil price is a significant gain for the economy.
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Mark To Market
We have observed that Rupee has depreciated by Rs 4 against the Dollar, for the last two and a half months, as FPIs continued to pull out funds from Indian capital markets. RBI has robust forex reserves of $480 billion at its disposal. Therefore, the central bank is having Rs 2 lakh crore of Mark-to-Market, which is an unbooked profit of RBI.
Fixed Income
Once the coronavirus syndrome fades out or when the dust settles, the economy is likely to revive based on the above-mentioned notes.
The fixed income market’s short or long term duration will look up, which is very attractive in the current scenario.
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Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank, said, “ RBI, very correctly so, announced a comprehensive bazooka covering all aspects of the economy by taking measures system-wide both through liquidity, rates and regulatory forbearance, and also targeted measures to manage the corporate bond markets.”
The RBI monetary policy in its meeting which took place ahead of the schedule, saw significant cuts in interest rates. This is likely to make the corporate and fixed income bonds more lucrative. Hence, you should stay invested. If you have a surplus fund, then it is the best time to invest.
