Mixo Das, APAC equity strategist at JPMorgan, on Tuesday, said that the long-term outlook for India looks very strong. Das also said that inflation is less of a concern right now for India and that the country is running a current account surplus rather than a deficit as compared to the last time when Fed was tapering in 2013.
“The long-term outlook looks really good but in the near term, maybe it's kind of peaked for the year and we could see the market just going sideways from here because at current valuations, it's very difficult to justify further upside in the major segments,” Das said, in an interview with CNBC-TV18.
According to him, the Evergrande issue will not become a global contagion. “Evergrande issue is not going to become a global contagion. It probably won't even become a Chinese system-wide contagion issue. So the corrections they are seeing in the property space, in the banking space will probably normalise, as we get more clarity on how exactly the government is going to treat Evergrande,” Das said.
He said that JPMorgan expects an announcement on tapering in November. “When the Fed does quantitative easing (QE), it's actually a signalling process, which affects the markets. So when the Fed does tapering, the effect is exactly the opposite, which means the market impact will be most felt when the Fed is signalling to taper, rather than when the Fed actually tapers. And this is the same experience that we had in 2013; the largest part of the market impact was felt when the Fed was actually contemplating tapering rather than when it actually commenced tapering by which time, all the impact was already over,” said Das.
“Given that we have been talking about tapering for several months now, I would say that almost 90 percent of the impact of tapering per se has already happened, so there will be some residual volatility as and when the Fed announces tapering but I don’t expect it to be meaningful,” he shared.
For the entire interview, watch the video