No Major Long-Term Market Downturn Expected, Adrian Mowat Asserts

Although current market corrections are noticeable, no significant long-term downturns are anticipated. There are potential catalysts that could stabilise the global market and encourage broader participation according to market veteran Adrian Mowat.

With the recent market correction, while there have been significant movements, the situation is not as dire as it might appear, he said. "I do not see this as a significant ongoing correction that people should get overly anxious about," Mowat told NDTV Profit.

He attributed the current market fluctuations partly to the yen carry trade, where investors borrow yen at low interest rates to invest in higher-yielding assets.

Recent large-scale interventions by the Bank of Japan have led many investors to close out these positions, impacting market dynamics. Despite this, Japan's economic fundamentals remain weak, with persistent inflation and subdued demand, Mowat said.

With the US' weak economic data, including mixed signals from global manufacturing PMI, markets might experience further declines in the short term but the underlying trend is more complex, according to the market veteran.

The Federal Reserve policy is a crucial potential trigger for market stability and expansion, he said. While the economic data is weak, there is substantial room for the Fed to act, with a possible 50 basis point rate cut in September. "A 50 basis point cut, while significant, is rational and could provide positive momentum for equities." If the Fed begins to ease policy, it could stimulate broader market participation and reduce the current narrow focus, Mowat said.

He also touched on the shifting perspectives of global banks regarding Fed actions, suggesting that a more dovish stance from the central bank could be beneficial for equities. This policy shift could also impact emerging markets positively, with India being a notable beneficiary.

India remains a strong player within emerging markets due to solid equity fundamentals, Mowat said. "If the Fed acts decisively and implements a 50 basis point cut in September, it could lead to increased inflows into markets like India."

The country's robust economic fundamentals position it well to capitalise on potential global shifts, he said.