ETMarkets Fund Manager Talk-Inflation unlikely a major cause of concern in medium term: Gautam Sinha, ICICI Pru Life
equities in the last 5 months somewhat fizzled out after inflation concerns resurfaced this month with the Reserve Bank of India’s hawkish view and firming up of oil prices.
However, this time around neither is inflation going to be a major cause of concern nor will it lead to sharp rate increases, according to Gautam Sinha Roy, executive vice president and fund manager — equity at ICICI Prudential Life Insurance Co.
“While the hike in this rate cycle has been steep, we believe we are somewhere close to the peak of the cycle…So, from the markets point of view, fear of further sharp rate hikes leading to dampening of risk appetite is unlikely,” Roy said in an interview with ETMarkets. Edited excerpts:
Inflation and rate hike concerns are making a comeback both on the domestic andglobal fronts. Is this likely to dampen the Indian market momentum in the near term? We believe inflation is not going to be a major cause of concern in the medium term.
While food inflation might remain transiently high, we expect the overall headline inflation number to remain range bound. The RBI will likely look at this as a transient phase while maintaining a cautious stance, leading to high rates for longer.
While the hike in this rate cycle has been steep, we believe we are somewhere close to the peak of the cycle (albeit, an elongated one). So, from the markets’ point of view, fear of further sharp rate hikes leading to dampening of risk appetite is unlikely.
Even though benchmark indices have come off their all-time highs, the momentum in the broader market remains upbeat. What’s driving this euphoria?
The momentum in the overall market is a function of liquidity and incremental money flows into the broader market.
