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Post Monetary Policy: Where to Invest
May 3, 2013

Our Take on Monetary Policy Statement for the year 2013-14.

Author : Dr.Renu Pothen

Update Monetary Policy_Sept2012

Update from Research Desk on monetary policy statement for 2013-14

Off late, North Block and Mint Road have been giving contradictory views regarding the health of our economy. Our Finance Minister, who has been on a world tour since he resumed office, has been convincing foreign investors that everything is fine in India. On the other hand, our Reserve Bank of India (RBI) governor, tends to supplement every rate cut with a hawkish message stating that there is limited room for further easing in the monetary stance as the macroeconomic scenario is not in good stead.

In the Monetary Policy Statement 2013-14 announced today, the RBI reduced the repo rate by 25 basis points to 7.25% which was as per market expectations. However, a glance through the policy document reveals that the central bank has a pessimistic outlook as far as the future growth potential of the economy is concerned. The governor has been making it very clear to the government that it will have to pull up its socks and start taking measures like removing the supply bottlenecks, setting up public investments and also continue with the fiscal consolidation steps.

In this scenario, we continue to maintain our positive stance on short-term funds for those investors with a 6-month to 1-year time horizon. Our recommended funds in this space are PineBridge India Short Term Fund and Templeton India Short-Term Income Plan.Investors who have a time horizon of more than a year can consider income funds such as Templeton India Income Builder Account and Canara Robeco Income Fund.

Dr. Renu Pothen
Research India

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