Sanger sees a good year for Indian market ahead barring four key risks. However, he says, the market may not see the sharp rebound from the oversold conditions that we had earlier this year.
Arvind Sanger, Managing Partner at Geosphere Capital Management says after the "fiscal cliff" issue, debt ceiling next big hurdle for the US. "I would put it as a relatively low probability that they would do anything that is dramatically negative but I would still say there are 1 in 3 chances that something could go wrong in the US in terms of reaching a suitable compromise," he told CNBC-TV18 in an interview.
The White House and congressional lawmakers have reached a deal to avoid the "fiscal cliff" that would delay harsh spending cuts by two months, Obama administration officials said on Monday. (read here)
On the European front, Sanger says, it does not look like the Greek, Italian or Spanish situation is going to blow up and bring down the euro given that the European Central Bank (ECB) has taken such a proactive stand. "So that looks okay and China seems to be on the mend," he says. On a global basis, the risk seems contained but the reality remains, he says, every time the market thought all the risks were contained, something has either re-appeared or something new has cropped up.
"While my current view is that 2013 should, hopefully, be free of any major blow ups—knowing the amount of leverage that many countries and governments face—I would not want to go too far in saying all risks have been resolved and there is no risk ahead of us in 2013," he told the channel.
For India, Sanger sees a good year ahead barring four key risks. However, he says, the market may not see the sharp rebound from the oversold conditions that we had earlier this year.
The risks he points out are:
1] Budget: Will the government continue to exercise prudent fiscal discipline?
2] Reforms Action: Will the government continue to take policy actions that are supportive of growth— fiscal discipline is one of the important elements of that supportive of growth.
3] RBI Vs Inflation: Does inflation remain under control and give Reserve Bank of India (RBI) enough leeway to continue to help the economy?
4] Politics: The wildcard is nothing happens on the political front to cause an early election, which could cause some nervousness in markets if that happens earlier than expected.
"Those risks notwithstanding, the Indian market should see continued recovery as the earnings growth of the Indian companies and Indian gross domestic product (GDP) growth should start to rebound moderately in 2014 and those should provide support for the market to work its way up higher," Sanger concludes.
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Mkt resilient at current level; bullish auto: ICICI Pru AMC