In conversation with UR Bhat, Co-founder and Director, Alphaniti Fintech
Q: The markets are currently focusing on how the global central banks, especially the US Fed, are fighting hard to tame inflation. However, they seem to be missing the US Fed’s balance-sheet reduction plans. Once that picks up pace, what is the likely impact on global financial markets?
>Balance-sheet tightening will be gradual; likely over the next two years
>More US Fed hikes to come
>Chances of a deep recession in the US
Q: For the markets, is the bulk of the pain behind us?
>Geopolitical events will be eyed
>Quantitative tightening (QT) along with negative geopolitical developments will have ramifications for the markets
Q: The Reserve Bank of India (RBI) has outlined- its strategy to combat inflation. Are the outlined measures what the markets expected? Do you think the money will move from markets to fixed deposits etc?
>RBI’s approach commendable
>Economic indicators are improving; trade deficit a concern
>India likely to be seen as an island of growth
>Indian markets will continue to do reasonably well
Q: Don’t you think the RBI rate hikes will dent demand?
>Do not foresee a serious dent in demand; economy still on a strong footing
>Rate hikes may not be as steep as envisaged earlier
Q: Foreign investor flows have started trickling in. Will the good times last?
>Deep recession in the US will sink global demand
>EMs may not get much risk capital as seen earlier
>India still will be an outlier; will get healthy flows
Q: How should investors build an equity corpus now – are large-caps still a safer option or an exposure to mid-and small-caps is also advisable?
>Well-managed large-caps are a better bet for retail investors
>Large-caps can weather the storm much better than their smaller peers
Q: Any sectors that you find investment-worthy at the current juncture?
>BFSI looks good
>Capital goods, infrastructure sectors have potential