Nomura expects two rate cuts of 25 bps each from the Reserve Bank of India (RBI) in the fourth quarter and also the first quarter of next year as inflation is likely to be on the downtrend in the near term amid slow recovery. Among stocks, the global brokerage likes rural consumption plays like Mahindra and Mahindra (M&M) and stays positive on ICICI Bank and State Bank of India (SBI).

Share Market Live

NSE

“As a house, our view is that in Q4 of this year and also Q1 of next year we might see a cut from the RBI; 25 bps each,” Nomura's Chetan Seth told CNBC-TV18.

Speaking on the reason for raising index targets for Asia-ex Japan equities, Seth discussed the key reasons for raising the targets on equities.

“Relative to our earlier expectations a lot of incremental data have come to fruition, for example, the economic data in the US as well as in Asia has been beating expectations —that’s one and earning in the US or Asian markets or equities relative to modest or muted expectations, the results have beaten those expectations and that’s a positive and there seems to be a lot of optimism around potential vaccine by the end of this year or early next year which is a positive and on US-China front it seems like trade talks are progressing well,” he said.

That said, the brokerage still expects some downside into Asian equities.

“Therefore, lots of reasons for upgrading index target but going into year-end we are still expecting some downside into Asian equities,” Seth added.

Watch the video for the full report

First Published:Aug 26, 2020 10:23 AM IST