Adopt wait and watch policy: Experts

Shashank Khade , Senior VP-Portfolio Management Services, Kotak Securities said the markets are going to wait for inflation to cool off and it will be some time till there is softening of inflation.

“In the last couple of weeks, there have been only negative surprises and inflation has been the biggest one. I think the markets are going to wait for inflation to really cool off. It is going to be some time till you really start seeing some sort of softening in inflation. That is going to be an uncertainty added to the global uncertainty, which still prevails,” said Khade.

Deepak Mohoni of Trendwatchindia.com said all the global markets are performing well and something is going wrong with the Indian market.

“All the global markets are at one-month highs or better and only India, China and Indonesia are in doldrums. In fact, Karachi is making a new all-time high. So, something is going wrong with our market. Perhaps, the interest rate risk or the fact that oil prices haven’t been changed, even though they have gone up two-three times in the global market and we are only issuing oil bonds. Something or the other is not going down very well with the market here,” stated Mohoni.      

Manish Sonthalia of Motilal Oswal Securities said that equities provide the best returns vis-à-vis other assets. He advised that people follow a wait and watch policy to see how things pan out.

“Don’t expect inflation to climb significantly from current levels. We would have to live with high inflation of more than 5.5% maybe for the next three-four months. In that perspective, that is a negative thing for the market. We still think that equities could provide the best returns vis-à-vis when it compares with other asset classes at this point in time.  If the Reserve Bank of India is going to hike CRR, etc, then this could only escalate things. We have to wait and watch to see how things pan out,” said Sonthalia.