Global equities likely to pullback in next 6 months: Rahul Chadha

Mirae has been moving from the mid-cap and small-cap space to large-caps for the last two to three months.

The current unabated rally in mid-cap and small-cap stocks is “a bit worrisome”, and global equities will likely go on a pullback mode over the next six months, according to Rahul Chadha, Chief Investment Officer, Mirae Asset Global Investments.

In an interview with CNBC-TV18, Chadha noted that Mirae has been moving from the mid-cap and small-cap space to large-caps for the last two to three months.

After a remarkable run for several weeks, mid-caps and small-caps went into correction mode on September 12, a day after Kotak Institutional Equities called the rally in midcaps “irrational exuberance.” In today’s trade, NSE Mid-cap index fell 2.62 percent, while the Small-cap index was down 3.4 percent.

Also Read: Mid-caps fall sharply, after Kotak calls it “irrational exuberance”

Chadha, however, said that he believes in the resilience of the India story, and Mirae has been overweight on India for the past five to seven years. He also projects a pullback in global equities over the next six months.

Stating that India is unlikely to see any rate cut before the US, he said in the next few months, the narrative is set to be more focused on inflation.  Policymakers are behind the curve when they have to focus on restoring growth, Chadha pointed out.

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He further said central banks will wait for clear signs of a slowdown before cutting rates, adding that it is unlikely that the US Federal Reserve is going to cut rates before 2024. He also added that most consumers are now curbing their spending due to the pandemic-induced woes, and people are looking at the festive season closely.