Mumbai: JP Morgan says India’s liquidity deficit is likely to worsen, hitting Rs. 1.5 lakh crore in June, as government spending re-mains tepid.
Core liquidity deficit could hit Rs. 100,000 crore (1 trillion rupees) by the end of June, the bank says.
The RBI needs to purchase Rs. 35,000 crore in bonds via OMOs by June if they want to bring down core liquidity deficit to their comfort band, JP Morgan says.
Recommends investors continue to receive five-year OIS as weak rupee likely to induce greater intervention by the RBI, and thus sterilization via OMOs, which will push down bond yields.