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Daily Voice | Rule out deep correction in market, strong earnings trajectory to continue, says Sampath Reddy of Bajaj Allianz

Overall demand seems to be improving, as indicated by a strong festive season, and the earnings trajectory for the remainder of FY22 and for FY23 remains quite healthy, with the expected economic recovery, says Reddy.

December 08, 2021 / 09:10 AM IST

Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance, says earnings growth will support the stock market rally even amid challenges of liquidity withdrawal and interest rate headwinds next year as the economy has come out of the pandemic-led slowdown.

A strong corporate earnings trajectory is expected in FY22 and FY23, Reddy told Moneycontrol in an interview. Any decline in the stock market may not be too deep and should be used as an opportunity to buy, says Reddy, who has over 20 years of experience in investment management. Edited excerpts:

The Monetary Policy Committee will announce its interest rate decision today. What are your broad expectations and do you expect the Reserve Bank of India to take more steps to squeeze liquidity?

Overall, across the board, central bankers are taking steps to gradually unwind liquidity measures introduced during the pandemic. The US Federal Reserve started tapering from November and of late has said that there is a need to increase the pace of tapering. In India, we expect the RBI to keep rates unchanged… and maintain its accommodative stance. The RBI will continue to calibrate its steps to normalise excess liquidity in the banking system. However, we expect that it will keep the policy tone balanced at this juncture, given the inflation and growth dynamics. Presently, we prefer the medium-term part of the yield curve given the steepness of the curve.