Daiwa Capital Markets on Monday said it expects gradual rate hike cycle in India, but not enough to kill the equity market.

In an interview to CNBC-TV18, Paul Kitney, APAC chief equity strategist, said, "The currencies that are depreciating the most against US dollar in a particular phase are in emerging markets, particularly those which have twin deficits."

“India falls into that particular category. It’s not as extreme as we have seen elsewhere in the world, whether be in Turkey, Brazil, Argentina etc, but nevertheless this is what largely behind the movement in the rupee,” Kitney said.

Talking about implications for India, Kitney said, “I do not think this is a negative. It’s positive for the export sector particularly information technology.”

“Peoples’ concerns regarding the impact on interest rates are tempered by the fact that reverse repo is trading at a positive real yield at the moment," Kitney added.

First Published:Sept 10, 2018 6:39 PM IST