ETMarkets Smart Talk- Global macro, FII flows among top 5 factors that will drive markets: Kedar Kadam

economictimes.indiatimes.com:

market declines,” says Kedar Kadam, Director — Listed Investments, Waterfield Advisors. In an interview with ETMarkets, Kadam said: “We expect the momentum to continue in small & midcaps though we suggest investors be selective and avoid the FOMO factor in picking stocks at the current market levels” Edited excerpts: We are seeing some nervousness at record highs for Mr Market. How do you see things moving – have we hit the top for the moment? When you are in your nervous 90’s, expect bouncers and choose your shots carefully.

The domestic equity markets have had a dream run over the past few months, buoyed by healthy corporate earnings growth, reasonable valuations, resilient domestic macros, positive global investor sentiment, and the influx of FII and DII money. In our view so long as these factors remain supportive, markets are here for a big inning and hence suggest investors add quality stocks from a 3-4 years perspective on market declines.

In the immediate term we remain cautious and expect market direction to be driven by - a) Global macro & geopolitical developments, b) ongoing earnings season, c) movement in commodity prices sp. Brent crude which has surpassed $85, as I write this, d) recovery in rural demand & overall consumer sentiments ahead of the festive season, and e) FII flows.

We expect the price action in Small and mid-cap space to pick up further pace on the upside. Interestingly the US Fed is open for further rate hikes. Do you see that could dampen the bulls party on D-Street? For the US Fed, the risks of pulling back too soon and kickstarting another vicious inflation spiral remain higher than the risks of doing too much.