Amit Premchandani, Senior Vice President and Fund Manager – Equity of UTI AMC is positive about the BFSI (banking, financial services and insurance) sector due to impressive loan growth, robust asset quality and adequate liquidity. He is also neutral to positive on the IT sector and believes value is emerging in the large-cap IT space. In an interview with Mint, Premchandani also shared his views on how the General Election outcome could impact the domestic market and what should investors do with mid and small-cap segments.
The market is forward-looking and tries to discount the future be it earnings, or major economic or political events. Unless the outcome is significantly different from the opinion polls, it is safe to assume markets in their wisdom have discounted it. Policymaking over the last few years has focussed on capex hence we expect more of the same as far as fiscal and legislative policy are concerned if we don’t see any change in government.
However, market participants continue to be watchful of the upcoming election results and may tend to react if the outcomes are not in line with the expectations. Also Read: BJP manifesto 2024 promises policy continuity. What does it mean for the Indian stock market? Higher fiscal deficits in the US and balance sheet reduction (bond sales) by the US Fed pose headwinds to a significant decline in US long-term yields.
At the same time, positive surprises in growth as well as employment numbers suggest a low risk of any hard landing. Both these factors have led to inflation turning out to be more sticky in the US. The rate cut expectation in the US has moved in a wide range from close to 150 bps at the start of the year to less than 75 bps now.
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