With domestic growth returning to India, the markets have been able to stave off every piece of bad news. However, according to Birla Sun Life Mutual Fund's Chief Executive Officer A Balasubramanian, the upcoming global events like the impending rate hike from the U.S. Federal Reserve as well as the U.S. Presidential Elections are likely to cause volatility in India's equity markets and cannot be ignored.
Consumption Demand To Pick Up
In an conversation with BloombergQuint during Mahurat trading, Balasubramanian believes that a good monsoon this year has set the tone for India's rural economy to pick-up. Government initiatives like the seventh pay commission and One Rank One Pension (OROP) are likely to result in an increase in spending patterns.
With lower inflation resulting in interest rates coming down, the lower input costs are likely to result in better corporate earnings going ahead, the Chief Executive of one of India's largest fund managers.
Wait And Watch Over I.T.
Balasubramanian believes that there is no reason to either be significantly overweight or underweight on the Indian I.T. sector. He said that the sector is at an intersting juncture as it has good earnings visibility and good balancesheets. He wanted to keep a close watch on how some of the companies are able to adapt to the changes in technology in recent times.
With the U.S. economy on the mend, Balasubramanian believes that more spending from the financial institutions can result in the revival of the fortunes of these companies.
Road Ahead For Indian Markets
While Balasubramanian sees an uptick in consumer demand over the next two-three quarters, he expects some volatility for the Indian equity markets over a similar time frame. Attributing the cause of volatility to global factors, Balasubramanian emphasised the need for India's domestic growth to keep the volatility in check.
Indian market volatility is likely to be the least as domestic inclusive growth is coming back. Over the next two-three quarters, you will see consumer demand picking up, interest rates coming down and the rural economy reviving. So all these factors put together you will see demand-supply gap narrowing and a better corporate performance going forward.A Balasubramanian, CEO, Birla Sun Life Mutual Fund
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
