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Macros improving; global deflation scare could hurt: Ridham

Desai expects corporate earnings growth to pick up after the next couple of quarters. He is bullish on capital goods, banks and consumer discretionary stocks like autos

India’s macro economic environment is improving, but it is still not past the point where it can ignore the developments in global markets, feels Ridham Desai of Morgan Stanley.

In an interview to CNBC-TV18, he says there is a deflation scare globally and that could hurt India in the short term. But the medium term outlook on India remains solid, and that investors should look at corrections as a buying opportunity.

Overall, the mood about India is positive and foreign investors are looking to add to their India portfolio, says Desai.

He expects corporate earnings growth to pick up after the next couple of quarters. He is bullish on capital goods, banks and consumer discretionary stocks like autos. He says the positives from an imporving economy has still not been priced in capital goods and bank stocks.

Desai is not too worried about the decline in crude prices and its implications for global growth. He says data over the last couple of months shows that global growth is fine and that lower crude prices did not necessarily mean slowing global growth.

He says the fall in crude price is because of excess supply and not necssarily due to weakening demand as is being made out to be.

Desai says the market could run up in the countdown to the Union Budget, even though the government is doing a lot of work outside of it.

He feels the Budget will be more about dfiscal consolidation, steps towards GST, and infrastructure allocation, while the major reforms like land, coal will be done outside it.

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