Sunil Subramaniam cracks the code of bearish trends and resilience

economictimes.indiatimes.com:

Sunil Subramaniam, MD & CEO, Sundaram Mutual. Edited excerpts:

ET Now: Can you provide your perspective on the current market situation and whether you think the bearish grip will continue?

Sunil Subramaniam: I believe the recent market volatility is driven more by the anticipation of the upcoming Fed meeting and the potential for one or two interest rate hikes. The market seems uncertain about this prospect.

If the Fed adopts a strong stance against inflation and opts for multiple rate hikes, it could impact certain factors. In the Indian market, the net flows from FPIs play a crucial role. Short-term FPIs, like hedge funds and active mutual funds, often borrow from the US market to invest in emerging markets like India.

If interest rates rise, their borrowing costs increase, potentially affecting their expected returns from emerging markets like ours. Therefore, the outcome of the Fed's discussion during the Jackson Hole conference regarding inflation-fighting measures holds significant importance.


ET Now: How do you think the potential interest rate hikes might affect the market?

Sunil Subramaniam: Apart from the impact on FPIs, interest rate hikes could lead to a stronger dollar. For FPIs investing from advanced economies, there's a risk that a weaker Indian currency might offset their gains.

This uncertainty has contributed to the market's recent choppiness and the bearish trend we've seen. However, it's worth noting that the mid and small cap sectors continue to show strength. This is largely due to domestic SIP flows.