Why India’s One Of Top Hedge Funds Expects An Even Greater Rally For Nifty

Even as the Nifty index hit record highs, Avendus Capital Alternate Strategies' Andrew Holland said an even greater rally could be around the corner as global growth picks up on the back of a U.S.-China tariff deal.

“I think the Nifty between now and then (after a trade deal) will get to the 12,500 level,” the chief executive officer at one of India's largest alternative investment funds told BloombergQuint in an interview. “I think the markets are expecting a Santa Claus extra rally on the back of a tariff deal.”

A tariff deal could spur global growth and that's good for emerging markets, he said, adding the tax cuts by the Indian government in the run up to the budget could also boost the market sentiment. “India's weight will mean we'll get flows as well. That will help push our markets.”

India's Nifty 50 Index has surged more than 11 percent so far this year, mostly on the back of a surprise corporate tax cut on Sept. 20. The benchmark index is currently trading at slightly above 12,000.

Holland is also betting on larger, high-quality stocks for now as the small- and-mid-cap stocks are affected by a prolonged slowdown. “The theme in the very short term is going to continue to be large caps. I don't think you should be looking too further down at the moment,” he said. “Once demand shows signs of revival, small- and-mid-cap stocks will automatically pick up.”

Watch | Andrew Holland on why Nifty may witness an even greater run...