RBI & Govt working in tandem; interest rate cut appears imminent: Nandan Chakraborty, Axis Capital

In a chat with ET Now, Nandan Chakraborty, MD-Institutional Equity Research, Axis Capital, shares his outlook for the economy. Excerpts:

ET Now: Let’s talk about the impact of low oil prices. Nobody was factoring in a virtual demise in crude and a meltdown in other commodities. How will earning projections and growth parameters change for the next two or three quarters because of the commodity decline? Is India now the only game in town because of this decline?

Nandan Chakraborty: I will tackle your first question first. The first thing to do when oil prices dip is to buy interest rate sensitives, and not the ones which depend on oil. It is pretty straightforward because if you look at oil marketing companies, as long as LPG and kerosene remain subsidized, they would not have too much of a slack in terms of increase in their profits.

So, this is what you do when oil prices come down. The fiscal situation is also improving, and the RBI and the government are now working more closely together because they trust each other’s actions more than they earlier did.

Therefore, an interest rate cut is more imminent than you would have otherwise thought.