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At Cafemutual Confluence 2022, Santosh Singh - Fund Manager, Motilal Oswal AMC shared insights on domestic markets. He said that the current market scenario offers a lot of opportunities across certain pockets. He believes that it is the time to remain invested and invest more rather than exiting.
In a sector-wise commentary, he said that financial sector is well-placed and likely to perform well. And, given the bullish psyche of consumers, the consumption sector will benefit.
Elaborating further, Santosh shared that despite global happenings, the perception of consumption is improving as per RBI data. Except for price levels, consumers believe that other variables will improve.
IT is one of the sectors that has got impacted. However, it appears to be a long-term story and is a case of a valuation slump that is going to provide opportunity.
India in a global context
Rising interest rates and inflation are concerns from global macros. Inflation in the US is mostly a result of wage growth. While there is a little bit of disinflation on the commodity side, the labour market is one of the inflation drivers. Next, bigger problem driving global consumption is liquidity.
With this in mind, there is a clear dichotomy in the market. It is almost like a lost decade for the Chinese market and NASDAQ recently made a new low. While Indian markets fell from the peak by 7-8%, their premium against global markets is increasing quite sharply and that becomes a cause of concern.
Also, problems in the US can be India’s problem as well. The US owns 20 of Indian equities and this explains the kind of outflows taking place. But we also see Indian retail investors creating a counter-balance by pouring in money.
The Indian rupee has appreciated against most of the big currencies other than the US Dollar. The deterioration of rupee is largely due to import of gold and oil and higher interest rates. While cross currency is becoming a little bit of a concern for exporting to the US, Indian rupee is holding up very well compared to global peers and India has adequate forex reserve to deal with uncertainty.
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