A pedestrian walks past a currency exchange store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Global Flows, Not Local Economy Is Driving India’s Market Rally, Says Ajay Srivastava

India’s market rally is driven by global flows and has nothing to do with the domestic economy, Dimensions Corporate Finance Services Ltd.’s Managing Director Ajay Srivastava said.

“Purely from the liquidity standpoint, you can be sanguine to say that there is a lot of global liquidity still floating around which is coming into the private equity market and and can be spilled over,” Srivastava told BloombergQuint in an interaction, adding that global flows coming into India are very strong.

Domestic investors, on the other hand, are very judiciously buying stocks, Srivastava said. “If the economy grows at the same rate and the crude oil prices remain high, domestic investors would take the money out from the equity market.”

Election Strategy: Party ‘A’ Versus Party ‘B’

Srivastava advised people to maintain the same investment strategy, with a focus on large-cap companies and market performers, if the present regime continues with a likewise majority. “That, plus the GDP of 6 percent, would mean bigger players making bigger bucks.”

There, however, would be a greater hope for small and mid-cap companies if there is a paradigm change in the election outcome.

Other Highlights:

  • Businesses are under stress due to economic slowdown and compliance issues.
  • There is a serious issue of revival of the economy.

Watch the full interview here: