 "Carry trade bets on Indian markets make a killing")
Indian equity and debt market have seen a sharp rally so far this calendar year. The country's benchmark indices have rallied a little more than seven per cent, while yields on the benchmark 10-year government bonds have softened about 20 basis points.
This, coupled with an appreciation in the rupee, has made India one of the hottest markets for 'carry trade' - borrowing in a low-interest currency, to invest in high-yielding asset class in a different market. For instance, if an investor would have borrowed in US dollars to invest in the benchmark Sensex at the end of last year, the trade would have yielded about 11 per cent, one of the highest in the world. A similar trade with the euro as an underlying currency would have yielded even more. Analysts, too, believe that any correction in the rupee or the markets could attract carry trade-related flows into emerging markets like India, amid loose global liquidity situation
This, coupled with an appreciation in the rupee, has made India one of the hottest markets for 'carry trade' - borrowing in a low-interest currency, to invest in high-yielding asset class in a different market. For instance, if an investor would have borrowed in US dollars to invest in the benchmark Sensex at the end of last year, the trade would have yielded about 11 per cent, one of the highest in the world. A similar trade with the euro as an underlying currency would have yielded even more. Analysts, too, believe that any correction in the rupee or the markets could attract carry trade-related flows into emerging markets like India, amid loose global liquidity situation