Market to be in consolidation phase over next 1-2 quarters: Mahesh Nandurkar
«When you are able to make a 5% risk-free rate in the US, then that is obviously going to be something that will put equity valuations all over the world into a question mark, so that is one thing that we need to keep in mind,» says Mahesh Nandurkar, Head of Research & MD, Jefferies.
What is your market view after the recent rally, is it time now for markets to consolidate or the upside in the market is still left in the near term?
Yes, I think the markets have had a decent run and my sense is that it is not simply because of the reason that there could be a consolidation phase ahead but also the other global risk that we need to keep in mind is the significantly higher US treasury yields.
I mean, the risk-free rates in the US have gone back up to the peak levels that we saw back in March. So, when you are able to make a 5% risk-free rate in the US, then that is obviously going to be something that will put equity valuations all over the world into a question mark, so that is one thing that we need to keep in mind.
Also, from the India standpoint, I think the Indian inflation itself was a big negative surprise, the last print that is, and my sense is that the inflation will probably stay at an elevated level at least for the next one quarter or so, so that will also push out the rate cut probabilities that some people were building in for the near term.
So, yes, those are the reasons why I think there could be a breather, there could be a consolidation phase in the market over the next, say, one to two quarters or so.
But from a medium to long term perspective, things are looking very attractive, the capex cycle is unfolding, economic growth is clearly standing out in the global context. So, I think on that front, yes, we
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