QE3 impact on India over-rated, Kotak warns

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India is unlikely to benefit too much from the Fed's new asset purchase programme, Kotak Institutional Equities warns in a note dated on Friday.

QE3 will likely boost commodity prices, including global crude, which would be a "negative" for India's import bill, while exports are "unlikely to be boosted significantly" as the overall economic impact may be limited, Kotak warns.

Higher oil prices will keep India's current account deficit "elevated", they add.

The risk-on trades could lead to increased flows into India in the near-term, but Kotak also warns policy woes remain from the euro zone and from the U.S. budget negotiations.

Copyright @ Thomson Reuters 2012

Story first published on: September 14, 2012 15:26 (IST)

Tags: US Federal Reserve, QE3, Indian economy

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