Economist Arvind Panagariya, who is widely expected to take a top advisory role in prime minister-elect Narendra Modi's government, wants its first budget to boost capital spending even at the risk of a higher fiscal deficit. He commented that in an economy where you are trying to push up the growth rate, a fiscal deficit of 4.5% (of GDP) is fine. The number is 4bps higher than the 4.1% budgeted by the outgoing government for FY15, which Panagariya called an "unrealistic" target (Financial Express).
On FX, USD/INR confined to between 58.400 - 58.500 lvls so far this morning. We expect prices to remain range bound with upside guarded by 58.600, while slips below 58.400 mark are likely to run into fresh buying. Focus on the swearing in ceremony of Mr. Narendra Modi, and the finalization of the cabinet union ministers. SENSEX rallied to above 25000 mark advancing nearly 1.3%. 10Y yields trading above 8.650% after declining to 5-m lows of 8.620% on last Friday. BB
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GBP/USD retreats to 1.2500 on renewed USD strength
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Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
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