We anticipate 10-15% correction in markets: Arindam Ghosh

Current easy liquidity conditions globally are going to tighten, says Arindam Ghosh, MD & CEO, Blackridge Capital Advisors.

Talking to CNBC-TV18, he says the equity market will correct 10-15 percent, because the liquidity surge seen in the past on the back of QE is expected to taper off, with the Fed explicit in announcing that they are going to initiate the measures. Here is the edited transcript of his interview with CNBC-TV18: Q: How are you viewing what is happening on the street? On Monday, the rupee was also at record lows but the crack as far as the equity space wasn’t that deep. But today, it is complete carnage, even though we have managed to steady ourselves to a certain extent. What essentially is pulling it down? Is it the fears that the Reserve Bank of India (RBI) won't move on rates in the upcoming policy on June 17? A: The sense is that we have right now clearly entered a risk-on environment. The easy liquidity conditions globally are now going to remain extremely tight. So, therefore there are repercussions that we are seeing now in the equity markets as well. Q: Considering this is definitely a bit of a global impact what we are seeing on the equity space. The dithering about quantitative easing (QE) still continues, nobody really knows what the Fed's stance is going to be. Given that what kind of an impact are you seeing on our own markets, what kind of levels would you work with as far as the Nifty goes? A: Our sense is that we have been anticipating at least 10-15 percent correction in the equity markets largely because the liquidity surge that we had seen in the past on the back of QE is expected to taper off. The Fed is already been explicit in announcing that they are going to initiate the measures. One could kind of get into lengthy debates on the timing and the quantum but the writing is on the wall. Therefore, that is essentially leading to investors now wanting to make their money work closer to home.