In a bid to give more liquidity into the market, the Reserve Bank of India (RBI) may decide to cut rates by near 0.50 to 0.25 per cent as India's three month treasury yield is trading at around 6.57 per cent, say experts. They believe that the additional liquidity would bring more money into the investment markets creating a pump in Indian portfolio investment from overseas.

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Speaking on the matter Anuj Gupta, Deputy Vice President — Research Commodities and Forex, Angel Broking told Zee Business online, "We are expecting a rate ut of around 0.5 per cent to 0.25 per cent as it would give more liquidity into the markets which is looking poised to scale new highs." He said that the RBI rate is currently at 6.5 per cent and a cut in rates would fuel portfolio investment on more liquidity available in the markets and attract overseas investors.

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Standing in sync with Anuj Gupta of Angel Broking; Anindya Banerjee, Analyst — Currency and Derivative Research at Kotak Securities said, "I am expecting around 0.25 per cent cut in the upcoming RBI Monetary Policy review as it would create more opportunity for investment on account of rise in liquidity." 

He said that India is desperately looking for foreign investment in bond and equity sector but of no use as both indices are trading at its highest levels among the emerging economies. Hence, any trigger in portfolio investment on account of additional market liquidity may attract foreign investors to look at Indian markets.