Sashi Krishnan of Birla Sun Life Insurance says there are a couple of triggers that can take the Indian market higher. It will be a sentiment positive for the market if Bills stuck in Rajya Sabha are passed; second, market is expecting another 50 bps rate cut from RBI and also liquidity in the system needs to turn positive with lower rates.
The correction seen in the Indian market is on the back of international cues and weakness across global equities, coupled with dollar strengthening, is the word coming in from Sashi Krishnan, CIO, Birla Sun Life Insurance. There is also a worry of an imminent rate hike in the US ahead of expectation, that is before September, he says.
Going ahead, there are a couple of triggers that can take the Indian market higher, he says. It will be a sentiment positive for the market if the Bills stuck in the Rajya Sabha are passed, he adds. Second, the market is expecting another 50 basis points rate cut from the Reserve Bank. Also, Krishnan says liquidity in the system needs to turn positive with lower interest rates, which will aid in moving the investment cycle.
Lastly, the market will be closely watching the fourth quarter (Q4) numbers, he says. It expects the Q4 numbers to be weak. However, if there is an indication of it bottoming out, and whatever the Budget has promised in terms of public expenditure is actually starting to make a difference, then the market will start recovering after this 4-5 percent correction, he adds. He believes the manufacturing cycle will take some more time to recover.
Over the last couple of days, the market witnessed an outflow of FII funds – not just in the equity market, but also in the debt market. Krishnan explains the rupee has weakened and the dollar has strengthened, there is also an expectation of a rate hike in the US. He says some money will go out if the Federal Reserve’s tone is hawkish in April.
Krishnan says it is difficult to predict which sector will take leadership in the next leg up. He sees stock-specific opportunities ahead. He likes private sector banks, and prefers them over public sector banks and believes oil marketing companies (OMCs) may also surprise positively.
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