Monday Market

Govt appears committed to fiscal discipline, consolidation

The rupee has hit life-time low recently, but it is still relatively better placed than during the US Federal Reserve taper tantrum of 2013, and has fared better than some of the other fragile emerging market currencies year-to-date in 2018, said Sampath Reddy, chief investment officer, Bajaj Allianz Life Insurance, in an interview with Sangeetha G.  However, weaker rupee and inflation can emerge as macro-headwinds for the market, he added. Excerpts:

Asset quality concerns at PSBs seem to be fading away

The recent correction in mid- and smallcap has to be viewed in conjunction with the significant return (BSE midcap and BSE smallcap index with around 250 per cent return since September 2013 till December 2017). Such minor corrections after significant rally are normal and in fact desirable, said Pankaj Pandey, head of research, ICICIdirect, in an interview with Ravi Ranjan Prasad. In terms of MF flows, we don’t expect these structural SIP flows to slow substantially, he added. Excerpts:

AIFs work well only for HNIs, not designed for mid-income people

The disposal income of the middle-income group is on the rise. A significant part of that incremental savings is expected to flow into AMCs and insurance. Thus, the market looks quite promising for the mutual fund industry, at least for the next five years, said Sumit Bilgaiyan, co-founder and director of Equity99, an equity research and investment advisory firm, in an interview with Ritwik Mukherjee.

FY19E earnings likely to grow by 22.8%

At beginning of 2018, our view was that midcaps would under perform largecaps during the year. It was premised on some key assumptions (mutual fund category re-classification, market cap reorganisation, rumours around introduction of LTCG and stretched valuations), which eventually played out, said Amisha Vora, joint managing director, Prabhudas Lilladher, in an interview with Ravi Ranjan Prasad. Excerpts:

The earnings season is about to close. How has been corporate India’s performance in the April-June quarter?

Escalation in trade war may impact equities as asset class

The Indian economy is facing several challenges, including elevated global crude oil prices, input cost inflation, uncertain monsoon trend, challenging fiscal condition and developments pertaining to global trade protectionism. All of these may be sentiment dampeners depending upon how these events unfold, said Hitesh Agarwal, executive vice-president and head of research, Religare Securities, in an interview with Sangeetha G.

AIFs could become a large asset class in coming years

India’s gross domestic product (GDP) is expected to be $4-4.5 trillion in 5 years. And with a multiplier of 0.8-1.2x, the market cap will be anywhere between $3.5 trillion and 5 trillion. Thus, lot of wealth will be created especially where companies move from small-cap to mid-cap and from mid- to large-cap in 5 years or so, said Viraj Mehta, managing director, Equirus PMS, in an interview with Ritwik Mukherjee. However, Mehta sounded a word of caution.

Investors must not expect big gains in 2018

The current spate of tariffs imposed by the US on different countries, including India, is just the tip of the iceberg and this could get chaotic, if taken lightly by Washington. In the long-run, for India, it could be positive as other trading members of the US like China and EU could have more favourable approach to India, considering the large domestic consumption scope present in the country, said Prashasta Seth, CEO, IIFL Asset Management, in an interview with Sangeetha G. Indian exporters could also get more favourable treatment in many of these countries, he added. Excerpts:

India will gain from investment by FIs in MFs

Hedge fund strategies are designed to exploit what economists refer to as market inefficiencies. This means the goal is to earn a return higher than what theory would suggest given the amount of risk taken. Manager considerations will include anything (within the law) that can uncover these inefficiencies, said Nelson Lacey, director (examinations), Chartered Alternative Investment Analyst (CAIA) Association, in an interview with Ritwik Mukherjee. Regulators also have considerations, especially when funds are being offered to retail investors, he added.

Two more 25bps interest rate hikes likely this year

If we look at the long-term trend, the rupee has always depreciated by 3 per cent per annum on an average. Bucking that long-term trend, in the past four years (barring the immediate past three months) the rupee has remained strong, primarily on account of the benefit arisen out of lower crude oil prices, said AK Sridhar, chief investment officer, IndiaFirst Life Insurance, in an interview with Ravi Ranjan Prasad. Today, both the factors are in negative territory, he added. Excerpts:

Double-digit GDP by March could be a challenge

The trade war that has erupted across the globe is not sustainable and thus the negative impact on the global equity markets are not going to be there for long, said Saravana Kumar, CIO of LIC Mutual, in an interview with Sangeetha G. In case of India, the trade war measures would make negative impact not only on New Delhi but Washington as well in the medium to long term, he added. Excerpts:

How do you evaluate the stock market movement in India in the past couple of weeks and the factors that influenced the market?

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