Macro Forum: The Street View


India Image

India began national elections on the 11 April, with the processing of votes expected to complete on the 23 May. Prime Minister Narendra Modi took office in 2014 with a mandate to implement economic and market reforms, with a perception of mixed results. A defeat is broadly seen as unlikely, however a weak showing by the incumbent Bharatiya Janata Party would likely represent a severe setback to reform momentum. Rising oil prices in 2018 saw the rupee fall to be Asia’s worst performing major currency but greater stability and a slower dollar tightening cycle is likely to offset a more neutral internal monetary policy, supporting the rupee in 2019. Following the release of the election timetable and calming of recent tensions with Pakistan over the Kashmir border, business confidence has recovered, with the Sensex index climbing to 38672.9 at the end of March from 36068.33 end of 2018.

Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
GDP* 6.6% 5.8%
Inflation 3.7% 2.1% 2.86% 3.18%
Benchmark Interest Rate - 6.5% 6% 5.75%
Benchmark Bond Yield** 8.025% 7.37% 7.59% 6.88%
Stock Market Index** 36227.14 36068.3 38672.9 39394.64


Real GDP Growth

Source: International Monetary Fund

India FX vs FV

Source: Bloomberg Spot Price and Actis methodology for Fundamental Value


Source: International Monetary Fund