A Sharp Fall In Indian Stocks Is Out Of Place, Says India’s Largest Portfolio Manager
A sharp fall in Indian equities in February is “overdone” and a potential rebound in the days ahead will be swift, according to India’s largest portfolio manager.
The Indian economy has not been fundamentally impacted by the coronavirus effect yet, Prateek Agarwal, chief investment officer at ASK Investment Managers, said, adding that a few weeks of disruption in specific sectors will not damage the economy too much. If China restarts production by the time the inventory levels for businesses start going down, then things would be not as bad as feared, he said.
Nifty 50 has tumbled 5.65 percent in February, the worst decline in seven months, as Indian stocks tracked the worst global selloff since the 2008 crisis. What’s exacerbating the situation for India is overseas investors are pulling out money from from exchange-traded funds, Agarwal said. The falling prices “gives one an opportunity to buy”.
According to Agarwal, the fall in crude oil prices saves India more import dollars, and the macroeconomic impact due to the coronavirus may get cushioned very well. Markets would make a comeback when governments across the world start pumping in excess liquidity and there is a higher probability of more stability compared to such instances in the past, he said.
Larger businesses, he said, would continue to do much better as the earnings growth in such companies is much better than mid caps. Lending businesses which borrow from abroad and can lend at fixed rate domestically could see margin expansion, companies which use energy as the primary import like cement and paints could show margin expansion, he said.
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