HSBC has picked INR as one of two Asian currencies along with the yuan that can hold their own in a climate of sticky JPY weakness, a more moderate pace of Chinese expansion, and increasing debate over Fed's quantitative easing.
INR is a main beneficiary of lower commodity prices as it suffers from significant oil and gold trade deficits, says HSBC.
Potential lower import prices will also give more monetary policy room to support growth, while the recent sharp drop in WPI may open the door for another RBI easing in the near future helping portfolio inflows into stock markets, according to HSBC.
Still, INR will continue to struggle given India's current account deficit, the bank says.
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