Rahul Chadha, Chief Investment Officer, Mirae Asset Global Investments, Hong Kong, expects the next three-four months to be challenging amid anticipation of aggressive rate hikes by the Federal Reserve.
"The word I used is challenging. The kind of hikes we are going to see from the Fed is completely unprecedented. It is expected that in May, June and also even in July we can see a 50 basis points hike with balance sheet contraction. Clearly, one does not know what would be the collateral damage for it but should stay cautious for the next three to six months," he said in an interview with CNBC.
Chadha said depreciation has come in currencies like the renminbi, rupee, the Korean won and the Japanese yen due to macro weakness. On a micro level, he expects ICICI Bank reported better-than-expected earnings, however, he expects one should understand the micro shocks which are coming through.
On the merger of HDFC twins, Chadha said both the stocks were fundamentally positive. "For HDFC, there is always an issue with such a huge balance sheet. There is a fair bit of dependence on wholesale liability, again there is much no CASA there. From a bank perspective, the bank gets access to mortgages and we saw in the initial part of the recovery when most of the peers growing their mortgage book HDFC Bank was lagging," he said.
A pullback should be used to add the HDFC group stocks and not be spooked by the recent fall you are seeing, he said.
"Fundamentally it is positive but the technical overhang when the sentiment is not great is doing the stock down. However, we maintained that this pullback should be a time to slowly add to the group. Whenever we find an opportunity we add both stocks in our portfolio," Chadha said.
He likes financial and auto stocks for the next one to two years as most of the lenders have not seen a meaningful fall. For auto stocks he expects they have not participated in the rally despite the better auto numbers. He says chips and commodity pressure will ease in the coming quarter.
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