A US slowdown could increase pressure for further cuts, but factors like strong employment and potential inflationary effects from Trump’s policies may keep the Fed cautious, said Amit Jain, the Co-Founder of Ashika Global Family Office Services in an interview to Moneycontrol.
According to him, the current indicators suggest only two rate cuts rather than the 3-4 cuts some experts expect.
At current valuations, he is extremely bullish on banking, FMCG, and selected PSU for long-term investments. Any investor who is investing in these themes will have a higher possibility of outpacing benchmark returns, he believes.
Do you think the market has bottomed out now, or do you still see the market hitting the June 2024 lows soon?
In my last interview with Moneycontrol, dated 8th September 2024 we highlighted our possible exit point and since then, the Indian equity markets have experienced significant fluctuations over the past six months. Since that date, Nifty-500, Nifty-200 and Nifty-50 have faced a substantial correction, influenced by geopolitical tensions and new SEBI regulations.
Given these developments, it appears that the market has not yet established a definitive bottom. The possibility of revisiting the June 2024 lows cannot be dismissed, especially considering ongoing global economic uncertainties and domestic challenges. Investors are advised to remain vigilant and adopt a cautious approach, focusing on sectors that demonstrate fundamental strength and resilience in this volatile environment.
Do you see rising risks for the US economy due to uncertainty created by Trump's tariff plans?
The escalating trade tensions triggered by President Donald Trump's tariff policies are amplifying risks for the US economy. These protectionist measures have strengthened the US dollar, exerting downward pressure on the Indian rupee—not due to domestic economic weaknesses, but as a consequence of global currency realignments.
While proponents argue that tariffs will lead to a "healthy correction," their broader economic implications suggest otherwise. The cumulative impact of these policies could destabilize key sectors, disrupt supply chains, and fuel inflationary pressures. With reciprocal tariffs set to take effect after April 2, investors and policymakers should brace for heightened volatility.
In essence, the uncertainty stemming from these tariff strategies presents significant challenges for the US economy and could send shockwaves through global markets, including India.
Will a potential slowdown in the US economy compel the Federal Reserve to cut interest rates 3-4 times in 2025?
The Federal Reserve is likely to take a measured approach to rate cuts in 2025. While last year Global markets were expecting 3-4 rate cuts, the Fed’s latest projections indicate only two 25 bps reductions, reflecting concerns over inflation and economic resilience.
A US slowdown could increase pressure for further cuts, but factors like strong employment and potential inflationary effects from Trump’s policies may keep the Fed cautious. Investors are adjusting portfolios accordingly, with futures markets pricing in two cuts, likely starting in June 2025.
In summary, while a slowdown could influence Fed policy, current indicators suggest only two rate cuts rather than the 3-4 cuts some expect.
What is your contrarian bet for FY26?
Our contrarian bet would be FMCG, PSUs & domestic consumption stories in Healthcare & Consumer Staples.
In Healthcare, domestic consumption-driven businesses—especially hospital chains, diagnostics, and wellness-focused brands—are poised for sustained growth amid rising healthcare awareness and increased insurance penetration. Consumer Staples, which struggled with margin pressures, are set to benefit from easing input costs and a revival in discretionary spending. These segments, though currently underappreciated by the market, have the potential to deliver significant returns as structural tailwinds gain momentum.
Which sectors are expected to lead the next bull rally?
At current valuations, we are extremely bullish on banking, FMCG, and selected PSU for long-term investments. Any investor who is investing in these themes will have a higher possibility of outpacing benchmark returns.
Do you believe gold will give significant returns in the coming years?
Post Covid-19, we have been a perpetual bull on gold as we were expecting a lot of geopolitical uncertainties which are now turning out to be true.
Looking ahead, I believe gold will continue to deliver significant returns, particularly for Indian investors who stand to benefit from both the rupee’s depreciation and rising gold prices in global markets. As a time-tested hedge against volatility and a key asset for portfolio diversification, gold remains a compelling investment choice for the coming years.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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