India Strategy - Taper Tantrum Missing As Markets Advance On Growth Inflation Dynamics: ICICI Securities
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ICICI Securities Report
Hints of starting quantitative easing tapering soon by the U.S. Federal Reserve coupled with the Evergrande crisis in China had little impact on global capital markets.
In fact, the U.S. yield spike in February 2021 had a much larger impact on global emerging markets like India as the ferocity of yield spike came as a surprise and spooked markets back then.
We believe market resilience reflects strong investor sentiment driven by expectations of a strong cyclical economic recovery as the third wave impact of Covid-19 appears underwhelming, while vaccination rate for India has surprised positively.
Latest data indicates stable consumer prices.
However, further rise in commodity prices in September 2021 continues to be a risk to the inflation trajectory.
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