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We are all looking for places to hide in this market, says Ashwini Agarwal of Ashmore Investment

While domestic benchmark indices are currently less than seven percent away from their record highs, they had tanked close to 15 percent earlier this month from all-time highs.

New Delhi / March 29, 2022 / 10:26 AM IST

Ashwini Agarwal, co-founder and portfolio manager at Ashmore Investment Management, is focusing on preservation of capital rather than appreciating it as he believes that the current market remains difficult.

In a conversation with CNBC-TV18, Agarwal said he is looking for places to hide instead of buying as he worries not so much about the upside as he does for the downside in the current market.

Domestic investors are battling macroeconomic risks from several fronts including the geopolitical crisis in Eastern Europe, a surge in inflation, monetary policy tightening by global central banks, and incessant selling by foreign portfolio investors.

While domestic benchmark indices are currently less than seven percent away from their record highs, they had tanked close to 15 percent earlier this month from the all-time highs hit in October 2021 due to Russia's invasion of Ukraine.

Agarwal is of the view that the upcoming March quarter earnings may not turn out to be as good as investors had hoped for earlier this year given the sharp rise in global commodity prices in the past month led by crude oil and likely slowdown in global demand.

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“We still don't know how deep this demand slowdown -- not that much in India but outside -- is and how long this inflation challenge will persist,” Agarwal said.

That said, Agarwal believes that the market is throwing opportunities for those that indulge in bottom-up stock picking given the steep correction in stocks over the past four-to-five months. The asset manager sees information technology, financial services, and telecom as good sectors given the limited impact of ongoing macroeconomic risks on their earnings.

He sees a tailwind for the IT sector from the recent depreciation in the rupee against the dollar which could cushion the blow to their margins from wage hikes to some extent. For financial services, Agarwal sees no risk from higher credit costs and believes banks could be beneficiaries of higher interest rates in the short term if the Reserve Bank of India were to raise rates.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Moneycontrol News
first published: Mar 29, 2022 10:26 am
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