Gopal Agrawal, deputy chief investment officer and head, equity, Mirae Asset MF, tells Masoom Gupte that government spending, global recovery and inflation management will determine market movement this year. Edited excerpts:
What is your outlook on the markets for the year ahead? Do you see the upward trend continuing?
In 2011, I expect people to reap good returns, mainly because the global liquidity is expected to remain strong. The US is already on a recovery path. In this environment, the Federal Reserve is bound to maintain high liquidity. So, if global liquidity stays good and emerging markets perform well, Indian market, too, will stay strong.
Which factors will play a critical role in determining the market movement?
Government spending, global recovery and inflation management. Nobody is worried on the growth front. The only concern is inflation and certain issues that cropped up in the recent past, like scams. So, if we manage inflation and clean the system, then flows should stay healthy throughout the next year.
On what themes are you betting your money this year?
Our biggest theme for the new year is global recovery. This can be played out through the information technology (IT), pharma and commodity stocks.
On the domestic front, the government has been raising funds through initial and follow-on public offers of public sector undertakings, mainly for deficit financing. We are waiting to see if the government spending picks up in the new year. This will improve the liquidity situation and will also be good for infrastructure companies.
