Are people more worried about the emerging market outflows as US yields rise or are they more worried because of uncertainty back home in India because of the demonetisation and the resultant impact on consumption and GDP? They are concerned about both and keeping their eyes on both these things. There was this major selloff in emerging markets over the last week since the US election. Although things have been stabilising over the last couple of days, there was a second tidal wave of concern running over India because of the demonetisation process. Investors are generally concerned about both. They are trying to assess the damage to the economy in the short term. We certainly think this is very good for India in the long term but the impact in short term has to be ascertained. It is a period of quite high uncertainty although I know a lot of our investors here are trying to focus on the long-term opportunities in India itself.
On dollar: We think bond yields are not going to go any higher than this over the long term, though they might shoot up in the short term and what that means also is that we are not looking for any material move in the US dollar against major developed market currencies like the euro, etc. We believe the worst of this selloff in EMs is over, although of course there is always the risk that we overshoot in the short term.
On possibility of interest rate hike by Fed Reserve in December: We formed our house view even before the election result were declared is that the Fed moves in December, looks pretty close to a done deal. Fed is going to raise rate twice in 2017. The Fed is a little bit of risk but we doubt it is a bigger risk. One to two rates hikes are broadly priced in now. We think a much bigger risk for markets is we get the bond market wrong and if bond yields go sharply higher from here. That will be a major concern.
On U.S. economic agenda post Donald Trump victory? Number one is deregulation which I am sure will mean resending some of the executive orders that President Obama has put in place in the last eight years. Secondly, we assume they are going to pursue tax reform which presumably means bringing some of this money held in company balance sheets overseas back home and reducing the overall tax rate which is very high in the US. That I think the Republicans in Congress will have no trouble signing on to. We are little bit more skeptical about the infrastructure programme because that is going to be more difficult and people might think to get through Congress because there are still plenty of people in the Republican side who are fiscal hawks and do not want to spend a lot more money.