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India may at worst correct 5-10%, PSU banks good: Geosphere

Sanger sees the slowdown in China continuing and Europe, Japan being under pressure in 2015.

Macro headwinds globally could cause volatility in equity markets, feels Arvind Sanger of Geosphere Capital. In an interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, he says India was still the brightest spot globally among equity markets. He does not expect the Indian market correcting more than 5-10 percent at worst.

He sees the slowdown in China continuing and Europe, Japan being under pressure in 2015.

Sanger is bullish on PSU banks selectively even though sentiment for this space is negative right now. He sees some more weakness as PSU banks dilute equity to raise capital, but feels that would be a good opportunity to start accumulating them. He feels PSU banks will do well as interest rates keep falling.

Below is the transcript of Arvind Sanger’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: It’s been slightly tricky time for global markets. For the last couple of days market has been under pressure and now there is fear that this economic slowdown that we are seeing across the globe could have a snowball effect into market like India into the equity market. What is your prognosis for 2015?

A: There are going to be some scares and hiccups along the way but my prognosis for 2015 is that Europe and Japan look like they will remain challenged. China has seen a massive rally in the equity markets but the economic fundamentals to us look as challenged as before, commodities like iron ore certainly do not give us any comfort that China is about to come out of its significant slowdown so it is going to continue to remain slow. So I think growth is going to be scarce and India certainly remains along with the US amongst the developed markets, India remains amongst the emerging markets one of the brightest spot. So we are still looking for more of the same but I think the volatility that could be cause by US data getting better and Fed moving towards raising rates would be one risk factor to keep an eye on in 2015 and second, what does European Central Bank (ECB) do; its been talking and threatening to do quantitative easing (QE) for a while and if its actually able to deliver that that will be good for markets. If ECB not able to deliver then that could be negative for markets. So there are couple of macro headwinds that could cause some volatility in markets.

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