Is the worst over for global equity markets?
Business Standard's Puneet Wadhwa spoke with Mark Matthews, head of research for Asia at Julius Baer to understand what he makes of the current market rally and if the worst of inflation is behind us
Puneet Wadhwa New Delhi
 "Mark Matthews, Head of research for Asia, Julius Baer")
Mark Matthews, Head of research for Asia, Julius Baer
Q: Are the global equity markets out of the woods when we talk about inflation-related fears?
Ans:
>Inflation has peaked and is on its way down
>Crude oil price was the largest driver of inflation
>Oil prices are softening now
>Inflation is a structural problem, especially in Europe
Q: What about India? The Sensex is flirting with the 60,000 mark again and is also close to its all-time high.
Ans:
>Indian markets have surprised the most this year
>Indian markets are down only around 5% in US dollar terms
>India has been resilient and will continue to be so
Q: Will the Indian markets continue to outperform in case the global markets correct, or see a sharp bounce from here on?
Ans:
>Indian markets are likely to outperform
>Buying by locals (domestic institutions, retail investors) has held up the market
>Foreign money should allocate more to India going ahead
Q: By when do you see FII lows pick up in a meaningful way?
Ans:
>Inflation in the US will fall gradually
>Inflation in the US will fall gradually
>Flows have already turned in favour of Indian markets
Q: Do you think the local institutional investors who bought at lower levels cash out as the markets rise gradually?
Ans:
>Difficult to predict their move
>Indian economy now in a strong structural up cycle
>Private sector capex to drive economic growth for the next 2 – 3 years
Also Read
>China downturn augurs well for India
>India stands out within the emerging markets
Q: By when do you see the capex plans of India Inc come through? This is at a time when the RBI is hiking rates, which in turn could dent demand. So, why would India Inc go for capex?
Ans:
>Rate hike cycle will not crimp consumption
>Inflation under control as oil prices have dropped
>Private capex cycle will benefit from govt infra spending
Q: How do you see the corporate earnings play out over the next few quarters?
Ans:
>Earnings growth expectation in FY23 beginning were around 20%; cut to low teens now
>Banks to see double digit earnings growth; consumer sector to do well
>Infra to benefit from govt spends
>See FY23 earnings growth in mid-teens
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First Published: Sep 14 2022 | 7:00 AM IST
