Dovish RBI boosts demand for Indian assets

Mumbai

A DOVISH central bank is one more reason for global investors to buy India.

Demand for local assets is rising after the Reserve Bank of India (RBI) last week lowered its inflation forecasts for the year ahead. With data on Monday showing that gains in consumer prices slowed to a record in May, the RBI's move is viewed as a precursor to an interest rate cut, which Deutsche Bank AG and Morgan Stanley Investment Management said could draw even more funds to the nation's stocks and bonds.

"Foreign investors will welcome a more dovish stance, and we would expect the market to start pricing in significant rate cuts over the next 12 months if the inflation backdrop continues to be benign," said Jens Nystedt, a New York-based port…