Two 25bps cuts, the first of which to take place on September 29: DBS Report

Report on RBI's forthcoming Monetary Policy expectations by DBS Bank

- Receding risks of US rate hikes and catch-up in rains open the window for further rate cuts

- DBS Report suggests for two 25bps cuts, the first of which to take place on September 29.

- CPI inflation remains the main policy target, with fall in WPI inflation not seen as posing deflationary risks

- DBS estimates suggest that the impact of below-normal monsoon lasts for 3-4 months, implying that inflation will likely stay within 5.0-5.5% through December.

- DBS expects the re­form agenda to be re-visited after next month's state elections, implying the impact won't be felt for some time yet.

- India is going through a phase of disinflation rather than deflation, suggests DBS Report

- Base effects are likely to keep inflation firm in FY17, alongside risks of an upturn in commodity prices

- By 1Q16, we expect 10Y INgov yields to fall towards 7.6%, registering total returns of 9.0% (holding period return of 4.5% over six months).

Source : Equity Bulls

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