The Indian market’s record run and the recent fall continue to fan valuation worries, with some experts even taking of a bubble in some pockets.
Ambit Asset Management CEO Sushant Bhansali says markets will likely consolidate rather than see a meaningful trend reversal.
Hard landing for global economy, geopolitical disruptions and constrained demand-supply could lead to volatility, says Bhansali who has more than 20 years of experience in the asset management and investment business.
In an interview to Moneycontrol, he identifies capex, populist measures, if any, and adherence to fiscal consolidation as things to watch out for in the upcoming budget. Edited excerpts:
Do you expect a trend reversal in coming months after the markets recent record run? What could trigger it?
We believe markets could consolidate rather than see a meaningful trend reversal. Hard landing on global growth, geopolitical disruptions and constrained demand-supply situations could lead to volatility in markets.
Do you expect IT companies to repeat their December quarter performance in the next quarter? Is it time to buy IT names or should we wait for the fourth earnings?
IT companies delivered better than subdued estimates in Q3. Markets were worried about a slowdown impacting discretionary spends in the US. We believe the IT sector will continue to surprise positively on the earnings front, led by execution of strong deal wins.
Also read: RIL Q3 surge driven by retail, Jio, oil & gas earnings: Here are 10 key points
Do you see more pain for chemical sector in the quarters ahead?
China has been dumping several commodities, which impacted prices. We have seen marginal improvement in pricing, which bodes well for operating margins. European markets are yet to see complete destocking of inventories. However, our sense is earnings will start looking up, led by better utilisation and improved realisations.
Which are the most important things to watch out for in the upcoming interim budget, given the general elections ahead?
Emphasis on capex, any populist measures and adherence to fiscal consolidation will be critical things to watch out for in the upcoming budget.
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Do you expect the government to focus more on the railway sector in the interim budget?
The railway budget got subsumed into general a few years ago. Infrastructure and capex thrust occupied the centre stage in the last couple of budgets. We expect the budget to strike a balance between road, railways and other infra projects.
Most global experts expect more rate cuts than the Federal Reserve chair has hinted (three) in 2024. What do you think?
With inflation cooling off and growth moderating, the Federal Reserve is in a much better position than it was a few months ago. Our understanding is the US could resort to rate cuts as soon as next quarter and CY24 could witness a series of cuts.
As everyone says the RBI follows the Fed path, do you expect the Indian central bank to cut rates in the second half of 2024?
India has charted its own path in a credible manner to maintain the impossible trinity of — stable growth, benign inflation and strong currency. The RBI will look at economic indicators and is data dependent rather than merely looking at external factors. Soft commodities is certainly good news but action will be back-ended.
Do you expect real estate ancillary space to continue on the growth path?
Yes, real estate, both housing and commercial, has seen a strong comeback after a long lull. This situation should continue and ancillary space will benefit immensely over the next few years. Our portfolios are well positioned to take advantage of this outlook.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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