homeeconomy NewsDon't think it is an end of rate cut cycle; RBI may cut aggressively in early 2020, says Envision Capital’s Nilesh Shah
economy | Dec 6, 2019 11:12 AM IST

Don't think it is an end of rate cut cycle; RBI may cut aggressively in early 2020, says Envision Capital’s Nilesh Shah

The Reserve Bank of India yesterday surprised with a no rate cut in its monetary policy. Nilesh Shah of Envision Capital said, "I still think there is room for rate cuts, it is just a pause and not an end to the rate cut cycle. I wouldn’t be surprised if the RBI sees more policy measures to kick start growth especially on the fiscal side and some of the other things. If that be the case, I wouldn’t be surprised if they come in with a much more aggressive rate cut sometime in early 2020 or maybe just post the budget.”

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Navneet Munot, CIO at SBI Mutual Fund said, “My sense is that we need to work a lot more to bring down the term premiums as well as the credit spreads and for that apart from the rate cuts, which everybody was expecting, maybe they are likely to come going forward, we need to do a lot more to bring down the term premiums.”
"We need a refinancing window etc. to bring down the credit spreads that is very critical because if the nominal GDP is growing at 6 percent and corporates are paying 8-9 percent, the balance sheets will go for a toss," said Munot.
CNBC-TV18 celebrating its 20th birthday caught up with the above two stalwarts to discuss the journey of financial markets and their association with the channel.
Speaking of his memories of 20 years ago Nilesh Shah said, “In the late 90’s or exactly 20 years back when CNBC-TV18 started off,  we didn’t talk about India growth and things of that kind. We were more technology driven, especially the capital markets were so obsessed about ICE stocks. Now that entire narrative has shifted from ICE to back home -- domestic growth, the fact that India offers a huge opportunity. So I think it has changed and transformed.”
"India, as well as CNBC-TV18 has moved from being a micro cap to a mega cap," said Shah.
Speaking about current market rally shah said, “It is fuelled by liquidity and all rallies definitely need liquidity. Apart from fundamentals, you also need liquidity for it to drive. It is like basically the engine as well as the petrol in the car. I clearly believe that investors still have faith in the long-term India growth story.”
When asked if he was buying now, Shah said, “This is a fantastic time, we have reduced our cash levels significantly right through 2019 and wouldn't be surprised if I step into 2020 with almost no cash and that is getting reflected in our confidence given that lot of our allocations are not into the top  10-20-30 stocks but down below. I think valuations out there have turned very attractive, so that is really now the opportunity.
Shah further added that there is high probability that sometime in 2020, the growth engines starts firing again and that is what we are betting on.
Munot said, “When CNBC-TV18 started in 1999, India’s GDP was USD 450 billion, per capita GDP was something like 460, so USD 450 billion is now close to USD 3 trillion, the per capita GDP has gone up 4 times, Sensex had just crossed 5000 I remember, sometime in October 1999 and we are at 40,000 plus today. So 5 times GDP, 4 times per capita and 8 times Sensex, so it has been a great journey for CNBC-TV18 and for India."
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