Negative Interest Rates to Increase Dividend Stocks, Gold Appeal

Jefferies India Pvt quote,” Indian investors may address assets such as property and gold (physical by nature) or dividend-yielding stocks as real interest rate hit first time lowest since 2013 because of the excess of liquidity”.
Mumbai-based analysts Abhinav Sinha and Mahesh Nandurkar wrote in a note to clients,” Low yield and undetermined growth could result in outgrow sustainable high-yielding dividend stocks”.
The note said,” The Reserve Bank of India’s attempted to bring down borrowing costs to the likely 10-year benchmark yield to below 5.5 per cent by getting bonds from the open market and through the usage of non-conventional tools for instance the US Federal Reserve-Style Operation.
Jefferies added, “The real interest rate or gap between government one year paper and inflation recorded a negative of 1.3 per cent while estimated consumer price inflation is at 5 per cent”.
Companies such as consumer-oriented, software exporters, and state run are offering dividend income opportunities while the physical asset’s appeal is dependent on how long real rates will remain negative.
Infosys, Tata Consultancy Services, Bharat Electronics, ITC, NTPC, Mahanagar Gas, and Container Corp. of India are the brokerage’s top equity picks.
The note said, “Residential property cycle in India has already been a sombre price for almost seven years, tallying with negative real rates in previous times. The Indian property market will bottom out if the current negative real rates sustain”.
Original Source: Economic Times

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