Flight of risk capital: GVA growth likely to fall in second half of 2018-19

So far, domestic institutions have been net buyers. But if there are redemption pressures, this could change

Inflation worries prompted the Reserve Bank of India (RBI) to maintain status quo in the latest Monetary Policy Review. While five Monetary Policy Committee members voted to hold rates, one wanted a hike. The central bank thinks growth is rebounding. But it sees multiple threats on the inflation front, including an inflationary Budget. 

Strong job growth in America makes it likely that the US Federal Reserve will accelerate normalisation, by hiking interest rates faster and selling off excess bonds acquired during the taper years. That would reduce the risk appetite of investors while leading to a stronger USD. 

Inflation will be driven