Global factors driving market correction, says Trust Mutual Fund's Mihir Vora
In an interview on CNBC-TV18, Mihir Vora, the Chief Investment Officer at Trust Mutual Fund, attributed the market correction primarily to global factors, emphasising that it's largely driven by the "higher for longer" interest rate scenario in the United States. This is affecting various asset classes, including bonds and equities, and it's having a ripple effect on emerging markets like India.
The market is undergoing a good correction, which is primarily driven by global factors, said chief investment officer at Trust Mutual Fund Mihir Vora.
“It is mostly because of global factors. The higher for longer situation, as far as interest rates in the US are concerned, is leading to an asset class correction across bonds, equities, and that's kind of trickling down into emerging markets, including India, even though our standard fundamentals are relatively much better than the rest of the world. So it's mostly because of global factors, add to it a bit of the uncertainty as far as the Israel and Ukraine situations are concerned,” he said.
Indian benchmark indices Nifty 50 and Sensex witnessed a lower opening during Thursday's trade session. Nifty 50 slipped below the 19,000 level for the first time since June 28, 2023, and Sensex witnessed a decline of nearly 500 points.
Despite the market correction, Vora emphasised that he doesn't see a reason to discontinue Systematic Investment Plans (SIPs) or regular investment plans.
“Whether it is your insurance premium on a yearly basis or your SIPs on a monthly basis you should definitely not discontinue them. Volatility is a nature of the beast, like a 4 or 5% correction is something that we see two or three times a year in any case in the equity markets. So this kind of correction is not really something to worry about.”
On the IT sector, Vora said the recent results weren't bad, but the guidance from IT companies has been somewhat weak. “The visibility is reducing as far as IT is concerned and as we discussed, it's natural because we are talking about less visibility as far as US and global growth is concerned. So IT would naturally be impacted in the next few quarters."
Vora highlighted that the capital expenditure (capex) cycle is continuing in the local economy, indicating investment and expansion by companies.
Vora is of the view the recovery in the rural economy is still K-shaped. “I would also expect some kind of populist measures. I don't think the rural economy has picked up that well, yet the economic recovery is still a bit K-shaped. So I think the government's thrust towards subsidies in the rural segment should also continue, which means that sectors like FMCG, which have not yet done so well may start to see some action, though the results have not been that great," he said.
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