US market rally more likely a reaction to Joe Biden's victory than US Fed cutting rates, says Ramesh Damani

He further said that the US market was reacting more to Joe Biden's victory versus the Fed cutting rates.

Speaking further about the US rally, Dennis said, “Even if the US rally is primarily because of the sudden emergence of Joe Biden as the frontrunner, I think that would spillover to global markets.”

“There is also a clear evidence now that there will be some sort of global coordinated attempt to support economies. I would like to see more evidence on the fiscal side, but the margin today was definitely the US political news that sparked this rally. I also think it has the ability to spill over to the rest of the world,” Dennis said. According to him, it was not a wise move by the Fed to cut rates, it sparked some panic.

Talking about investments in the Indian equity markets Damani said, “While the largecap stocks have continued to perform well, they are very expensive but the small and midcap stocks with good dividend yield, reasonable prospects that they will survive have been thrown out of the dishwasher. So that is a segment I would look at where the business fundamentals are intact, the business is going to remain intact for 5-10 years, dividend yields are fairly robust. I think that is a good segment to cherry-pick at this time.”

Speaking on Indian markets Dennis said, “Unfortunately, we are going to continue to hear lots of news about coronavirus cases, victims, it spreading around the world for a long time. This is far from over and that gives a scare, so the currency came down as well.”

“It’s just a fact that all economies are going to suffer from this news and it still means that despite better political news out of the US, I am so cautious about markets in the short-term because we haven’t seen any significant data reaction to the coronavirus; a macro or corporate data. We have seen downgrades to company and guidance etc., and so what happened to India in last 24-48 hours is going to happen elsewhere as well. I still think India is somewhat defensive against this backdrop,” added Dennis.