![]() ![]() With the monetary policy tightening cycle over, there is “no obvious near-term trigger for a further valuation de-rating save for a bout of external risk-off market action", he wrote. Wood sees average inflation of 5% this financial year and expects a cut in policy rates either later this year or next year. Headline inflation in India has fallen to 4.7% in April and is seen dropping further to near 4% in May. “The most obviously positive point, from a stock market standpoint, is that the monetary tightening cycle is all but over with inflation falling in recent months," he wrote. Unlike the 2016 demonetisation, local banks have not seen a rush to deposit notes, but consumers have chosen to spend them on mangoes to luxury watches. The withdrawal of 2000-rupee notes is unlikely to be disruptive for the economy, analysts have said. ![]() India will see a series of state polls this year and a general election in 2024. ![]() Elections are financed in India by godowns stuffed with cash," he wrote. “But there is also a political motivation on the part of the incumbent Bharatiya Janata Party government in terms of opposition parties’ funding activities. In his weekly ‘GREED & Fear’, Wood said the note withdrawal is “officially being rationalised on the anti-corruption angle". India’s “mini-demonetisation", via the withdrawal of 2000-rupee currency notes, has no monetary policy implications but may have political motivations, said Jefferies’ Chris Wood. ![]()
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