Why Taher Badshah Says ‘Sharp Correction’ Unlikely Despite Heady Stock Run Up
India’s hinterland will lead the rebound in a faltering economy, according to Taher Badshah, propping up a rally in the nation’s stock market that’s already looked past dire economic projections and mounting coronavirus cases to jump more than 50% from its March low.
The markets are moving away from the daily rise in cases and focusing on recoveries, Badshah said. “As long as the recovery and mortality rates are favourable, I think the market will probably overlook the rise in cases,” the director and chief investment officer (equities) of Invesco Mutual Fund, which according to the Association of Mutual Funds in India manages Rs 23,103 crore assets, told BloombergQuint in an interview.
The rural and semi-urban regions, given that they are better positioned than metropolitan cities at the moment, may lead India’s growth revival, attracting the market’s focus, he said. “What we call the ‘Bharat of India’ is holding up well and could support India’s growth comeback.”
While the markets have stepped a little ahead of fundamentals for the short term, Badshah doesn’t anticipate a very sharp correction.
India’s equities have recovered bulk of their losses from the March selloff—the worst in more than a decade—triggered by the coronavirus pandemic. That came as the monetary and fiscal stimuli by the central bank and financial aid by the government improved sentiment. India will spend about Rs 1.5 lakh crore, as part of its Rs 20-lakh-crore ‘Atmanirbhar Bharat’ Covid-19 pandemic rescue package, to help farmers and fishermen boost exports and profits as the nation gradually reopens after the world’s biggest lockdown. While the economy still heads toward a rare annual contraction in more than four decades, the government sees rural India as the lone bright spot.
According to Badshah, economies, nations, and governments across the world are little more prepared compared with March and early April. Now, the government is adequately equipped and has a good sense of necessity in health infrastructure to handle a pandemic, he said.
Watch the full conversation here:
Global Market Outlook
- The U.S. and China are twin economies in the world which matter to all.
- The U.S and China had relatively better starting points as their banking systems were in better shape.
- The situation with regards to the U.S. households is only getting better. From leverages and declining interest rates, they have monetary support with a very substantial measure.
- China is stabilising even though it’s the region where the problem initially started.
- China is the one country that has not entered any stimulus this time, unlike in 2009-10, when it was the first nation to stimulate its economy.
- If the U.S. and China seem to be reasonably in good shape to come back with a little more vigor, that should help emerging markets like India.
- From the global market standpoint, one critical risk is the policy risk.
- Almost overweight across most strategies as far as industrials are concerned.
- Seekers of value.
- Does look at valuations. Looks valuations in the context of longer-term delivery on returns on capital or cash flow generation.