Indian Market Soars as Central Bank Unexpectedly Cuts Interest Rates

TORONTO, Jan. 15, 2015 /CNW/ - "Yesterday's unexpected cut in interest rates by the Reserve Bank of India ("RBI") will be a powerful boon to Indian equities and investors of the Excel India Fund" says Bhim D. Asdhir, President and CEO of Excel Funds Management Inc. ("Excel Funds")

The Excel India Fund is the largest and longest-running India Fund in Canada and was the top performing mutual fund in Canada last year with a return of 54.2%, outperforming more than 4,000 other mutual funds.* "We anticipate another outstanding year for the Excel India Fund," says Asdhir. Today's RBI cut has led to a sharp rally in both the bond and equity markets with the SENSEX Index posting its biggest gain in over 5 years surging 728 points, ending  at 28,075.

The Indian economy is already one of the fastest growing economies in the world and is expected to grow at a rate of approximately 7% to 8% over the next two years, more than twice as fast as the global economy. Last night, the RBI unexpectedly cut its policy rate from 8% to 7.75% in an initial step to monetary easing which will also have the effect of stimulating even more growth.

In a statement announcing the rate cut, Governor Raghuram Rajan stated that several factors, among them a decline in food and vegetable prices, lower international commodity prices, and continued global disinflationary pressures have led to a reduction of inflation, triggering the opportunity for lower interest rates.

"We believe this is the beginning of a rate cut cycle in an environment where rates are very high while inflation has been trending lower," says David Kunselman, Senior Portfolio Manager with Excel Funds. "Over the next year, we predict that we will see an additional 100 basis points of cuts to the country's main policy rate."

Last year the Indian equity market was among the best performing major markets in the world, with the India SENSEX Index making a gain of 43% in Canadian dollars. Kunselman anticipates that this trend of strong growth will continue. He cites Merrill Lynch research released last week, claimed that of the previous 9 times the Indian markets produced a return greater than 30%, it provided a positive return in 7 of the following years, averaging 17.5%.  In addition, the research showed that market performance in the second year of a new government has also been positive, returning on average 26% on five of the last six occasions. 

Incidentally, a new majority Indian government, the first in a quarter of a century, came to power last year and has announced massive investor-friendly reforms which promise to turn India into the world's next economic superpower.

"The Excel India Fund, which is managed 'on-the ground' in India by the award-winning Birla Sun Life AMC Ltd., will definitely benefit from a surge in the Indian equity market, with the ultimate beneficiaries being our investors," contends Asdhir.

*Morningstar Canada as at December 31, 2014

About Excel Funds

Established in 1998, Excel offers the widest selection of emerging markets funds to Canadian investors. Through its network of sub-advisors, Excel has access to over 200 local portfolio managers and analysts around the world. Excel's on-the ground sub-advisors, proprietary asset allocation model and best-in-class portfolio managers contribute to the firm being recognized as "Your Authority in Emerging Markets" in Canada.

Certain statements in this press release may be viewed as forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, intentions, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "is expected", "anticipates", "plans", "estimates" or "intends" (or negative or grammatical variations thereof), or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements including as a result of changes in the general economic and political environment, changes in applicable legislation, and the performance of the mutual fund after completion of the merger. Actual events or results may differ materially from such forward-looking statements as a result of risks facing the mutual fund, most of which are beyond the control of the mutual fund. There are no assurances that the mutual fund can fulfill such forward-looking statements and the mutual fund does not undertake any obligation to update such statements

SOURCE Excel Funds Management Inc.

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