Expect Indian IT to outperform global stocks; consumption slowdown may affect banks: Pacific Paradigm

Punita Kumar Sinha, managing partner of Pacific Paradigm Advisors and chairperson of InCred AMC, on Monday said that the banking sector could face some pressure owing to a slowdown in consumption. Sinha further said that Indian IT will outperform the global IT stocks.

Speaking in an interview with CNBC-TV18, she said, “There has been a bit of unemployment because of COVID and the consumer sector is under pressure and some corporate sector loans could also be at risk, but consumer side is where I see a lot of risks as people continue to see unemployment. So, banks might face some pressures. However, it’s closely linked to what the economy does, but I am not too concerned because as I said, the economy is on the mend.”

“Indian IT will relatively outperform global IT if regulations across the world get tougher and from a growth perspective, there is plenty of room to grow. The only thing to watch is valuation and if the sentiment overall turns negative for technology, then that might impact flow to technology stocks, but at the moment I am not seeing any huge concerns on Indian IT,” said Sinha.

On global markets, she said, “While India seems to be opening up trajectory; south-east Asia, in particular, is getting hit hard now on the Delta variant. So, the Asian markets are getting impacted negatively and so we do have negative global cues as the US markets have also been choppy; Asian markets are looking choppy given the variant and COVID spreads there.”

“India is looking better because we had our bad COVID situation and it’s not to say that it won’t come back, but temporarily at least we are on the reopening side. Inflation is a concern, not just in India but globally too and all central banks are focusing on that; valuations across the globe and easy money has been made and so it’s much more of a stock picker’s market where you have to work hard to find attractive stocks,” Sinha said.

She further said that the worry is not growth but inflation and what the central banks will be doing next.

For the entire interview, watch the video.