The tightening of monetary policy in the United States and an economic slowdown in China has weighed, and will likely continue to weigh on risk assets worldwide, says noted analyst Saurabh Mukherjea.
This, he adds, will also bog down Indian equities, which will suffer from an abatement in “hot money” flows and in the absence in the much-expected earnings turnaround.
“Risk assets are selling off everywhere: be it commodities, emerging market equities or junk bonds,” Mukherjea, CEO – Institutional Equities at Ambit Capital, told CNBC-TV18 in an interview. “Foreign institutional investors (FIIs) will likely continue to be net seller of equities leaving domestic inflows as the only source of support for stocks.”
The earnings turnaround, too, will not take place for another six quarters, according to Mukherjea, who advises investors to prefer “caution” over “aggression” while approaching equities. “This market is not going anywhere in a hurry.”
While being particularly positive on no particular sector, Mukherjea said he saw select opportunities in road construction, manufacturing goods exports and the urban consumption theme.
Interview transcript to follow.