Fed rate cut good for EMs; don’t see any positive trigger in PSUs but bullish on private banks: Dinshaw Irani
Dinshaw Irani, CEO, Helios MF, says they have been moving out of PSU space for a while. Going forward, unless something dramatic happens in the sense of a divestment in the case of PSUs, I don’t think there will be any positive triggers for that space.Irani also says that they have not eased off in smallcaps.
How is life after a 50 bps cut? What does it spell for India?
Dinshaw Irani: Basically, history repeats. Every time there has been a rate cut, we have seen a falloff in the market. I think it is basically sell-on-news. But this time around, I feel it is a bit different. It is different because the cuts are happening to the strength of the economy. While unemployment is picking up there, the US economy is not in a recession.
The last time the Fed did these kinds of 50 bps cuts, they started off their cutting season with 50 bps. It has been done three times earlier and all the three times led to a very big recession because they were fighting a demon at that point in time. But today is not that time. It is very different from what is happening here. However, having said that, the biggest beneficiary would be the rate sensitives like emerging markets as and when this cut gets built in. We will see flows coming back to India or that already is happening but that will continue.
The other big talking point is the underperformance of the broader markets. Are they finally getting undone and is this the valuation scare that all the guys were flagging out earlier that they have run up quite a bit?
Dinshaw Irani: Actua
