After staging impressive rallies in the run-up to elections, Indian stocks and the rupee have scope for further upside, said a report by Goldman Sachs.
“The general elections in India resulted in an unequivocal verdict in favour of the opposition BJP, and there is substantial momentum behind the prospects for economic reform. Expectations of a market-friendly outcome have seen Indian equities, the rupee and rupee swaps rally — and the key question now is whether these moves can extend. Our general answer to that question is a qualified ‘yes’….” Goldman Sachs said in a research note.
Indian equities, rupee and rupee-swaps have all seen rallies of varying intensity in anticipation of a reformist government and post elections these moves are likely to extend further, it said.
On rupee, the report said, it is likely to remain “steady” as positive policy dynamics and capital inflows push the currency stronger, but the RBI is likely to resist too much spot appreciation. Goldman Sachs, said the rupee is likely to be around 58.5/$ in the next three months, 61/$ in next six months and 63 in the next 12 months.