See scope for rate cut, FII inflows to be less supportive: Kotak

Sanjeev Prasad of Kotak Institutional Equities says he sees limited scope for re-rating for large parts of the Indian market as global bond yields start to move up and valuation multiples are at high levels post their significant re-rating over the past 5-6 years mirroring the fall in global bond yields.

The recent hardening of global bond yields suggests that markets have finally started to appreciate the limited ability of global central banks to reduce short-term rates further and price in an increase in US Fed rate in December 2016, he feels.

He expects flows to be less supportive; emerging markets flows have reversed in the past 2-3 weeks perhaps reflecting outflows from passive macro funds on the back of higher global yields and a stronger US dollar.

Prasad says he does see scope for further rate cuts in India, which may drive re-rating of regulated utilities.