No Major Market Disruptions Expected Despite India-Pakistan Tensions, Says Ravi Dharamshi
He noted the recent market rally was already due for a pause.
The Indian stock markets gave up initial gains on Friday as cross-border tensions between India and Pakistan escalated after the Pahalgam attacks in Kashmir in which terrorists gunned down 26 people.
However, Ravi Dharamshi, chief investment officer of ValueQuest Investment Advisors, while acknowledging its seriousness, believes the market impact will be limited.
"It's a sad tragic thing that has happened, which will lead to escalation of tension with the neighbours, but from a capital markets point of view, don't think it's that big of an event," Dharamshi told NDTV Profit.
He noted the recent market rally was already due for a pause. "Markets had run up sharply. Even without this event, we would've seen a mild correction." According to him, this is a normal breather, not a reversal of the broader uptrend.
On global trade, Dharamshi offered an interesting perspective, saying US President Donald Trump's negotiation tactics include making loud demands in order to make big deals.
He suggested India might benefit from this as it could be among the first to strike a deal, and it may turn out better than expected. With friction growing between the US and southeast Asia or China, India may land on the right side of global shifts.
He remains optimistic about specific sectors, particularly financials as they're tied to domestic growth and unaffected by tariffs.
With improving government support, liquidity, and a recovering economy, things are looking up. Asset quality in banks remains strong, and earnings season is still ongoing, Dharamshi added.
Dharamshi advises investors to hold off on major sectoral bets until there's more clarity on tariffs. However, he maintains that the overall market trend remains positive. "This is still a 'buy on dips' market."
There has been a deeper correction and while the pace of recovery may now slow, the medium-term outlook remains strong. He doesn't expect quick gains in three months, but over three to five years, equities will remain attractive.
He also pointed to a shift in global capital flows. He pointed out that for the first time in years, money is moving out of US treasuries and the dollar. Confidence in the US as a safe haven is waning. This makes emerging markets, including India, relatively more attractive.
India will continue to trade at a premium unless there are significant promoter dilutions. Every economy is different and they cannot be placed in the same bucket, he added.
