The Indian equity markets are still a worthwhile bet as we now move towards the downhill journey of the rate hike cycle, said market veteran Shankar Sharma in an exclusive interview with Moneycontrol.
Despite some momentary hesitations in the market journey caused by news flows from various central banks and the ongoing Russian problem, Sharma is confident that Indian equities will continue to rise. “I think that the bull market in India and in the other parts of the world is well and truly on,” Sharma said. “I don't think that the kind of hawkish noises from various central banks is going to derail that.”
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Sharma predicts that by the end of CY23 or the first quarter of FY24, the central banks would display softening. “The central banks have been caught napping and they will not stop at just a surface neutralizing inflation, they will overcompensate, they will over-correct… which is exactly what we are seeing right now,” he said.
Shankar believes that the markets are forward-looking and are comfortable with the notion that by the year-end, we will approach the bottom of the current rate tightening cycle. He believes that markets have discounted the coming rates hikes fully and are set for a bull run.
“Markets have looked through this problem of inflation, looked through this smoke and mirrors game and they are very comfortable with what lies ahead," said Shankar.
Sharma believes that amidst the Brazil, Russia, India, China and South Africa (BRICS) countries that were considered to become the bulwarks of global growth, India is the only country from the original pack that continues to be strong. The Chinese economy is not recovering as expected, Russia is seen as a bad boy and Brazil has political issues.
On the contrary, India continues to display strong growth potential on the back of decent macroeconomic policies, micro policies, political stability, and GDP growth. He believes this makes the case strong for foreign flows into the country. “Out of the five BRICS constituents, the only one worth looking at now is India. That's why you're seeing the return of portfolio flows,” said Sharma.
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