Shankar Sharma, Vice Chairman and Joint MD of First Global, believe we are setting ourselves for a more modest pace of increase in the second half.
“As of right now, we are up about 45 percent for the year. I would be very surprised if we do another 45 percent in the coming six months,” he said in an interview with CNBC-TV18.
“People think it would be up like 100 percent this year. I would attach 30 percent probability to that, more like 60-70 percent could be a more normal 15-20 percent kind of returns, I would be very happy with that,” he added.
Inflation has been a dangling sword over the market’s head for the last several months ever since the commodity rally started.
“My view is that on a global basis, from wherever it is right now, I don’t see much incremental upside to inflation. I can only see downside. The reason for that is the US economy cannot afford higher rates,” he shared.
“Any economy in the world cannot afford higher rates. So the biggest economy in the world will start to strengthen the dollar because that is the easiest way to kill inflation. That trend is beginning to take shape, the dollar index is surging, euro has crashed, bitcoin is falling, and all the components of a strong dollar trend are now coming together. That is the way the US will kill inflation so as to not get forced to raise rates,” he explained.
“They are going to keep a lid on inflation by strengthening the US dollar and in my view therefore the inflation trade doesn’t work anymore,” he said.
In terms of markets, he mentioned, “We have gone up a lot, there is enough room for a reasonable correction, the correction will happen but it will be localized to the areas where the biggest damage can be expected which is lenders, financials.”
He has been very light on banks in the last one year, he said.
For the full interview, watch the accompanying video.
(Edited by : Aditi Gautam)
First Published: IST