Andrew Holland, Chief Executive Officer of Avendus Capital Public Markets Alternate Strategies, believes the talk about the US Fed tapering isn’t a surprise to the market. “Even if they do taper $10-15 billion a month, I think there is still plenty of liquidity in the system to keep markets pushing along,” he said.
“Everyone is writing of Jackson Hole as being a bit of a non-event but usually there is always a surprise in-store for us. So, I think that will keep the markets volatile, I do feel that if growth is slowing then earnings globally will have to be brought down and that could bring in market correction, not just tapering,” he shared.
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Andrew sees 5-10 percent global correction depending on the growth expectations. “With the commodity prices falling, we have yet to see analysts in India start to reduce their forecasts, which I am sure they will have to if these prices remain where they are. So I think those are the factors which the markets have been happily ignoring, not just in India, but elsewhere. But once that starts to come in, then I think markets could go down to the kind of levels you were talking about,” he said.
“Commodities is obviously a place where we have seen some kind of weakness over the last few weeks despite the kind of roll up that you have seen in the share prices, in terms of the commodity prices themselves,” he added.
According to him, retail investors are very strong not just in India but globally, and they are the ones forcing markets. “We cannot ignore them, they are buying on dips and it has worked very well for them,” he said.
He believes, IT and pharma is the place to hide. “Because when market risk comes, it comes very quickly, markets fall very quickly and then, what we have been seeing is the buy on dips happening. But it is that day, when sometimes when the market doesn't recover, and you don't see that buying on dips, it starts to kind of hurt investors. I think that the recent IPOs as well, where the premiums haven't been as large as maybe some investors were hoping, again, just caused a little bit of pain, that the markets probably weren't expecting,” he explained.
For the full interview, watch the accompanying video.
(Edited by : Dipika Ghosh)