Seeing correction in markets globally on fear of inflation, says Kotak Mahindra AMC’s Nilesh Shah

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Global financial markets have gone through a stomach churning roller coaster in the past few days as COVID-19 cases surged in many emerging markets of Asia as also in the US and in Europe. To discuss where the Indian markets are heading and what is going on globally, CNBC-TV18 spoke to Jai Bala of Cashthechaos.com; Manish Singh, CIO, Crossbridge Capital; and Nilesh Shah, MD of Kotak Mahindra AMC.

Global financial markets have gone through a stomach churning roller coaster in the past few days as COVID-19 cases surged in many emerging markets of Asia as also in the US and in Europe.
Wall Street Indices fell sharply starting last Friday, but what was even more puzzling was the fall in bond yields. The US 1-Year bond yields fell below 1.20 percent on Monday, a new 5-month low signifying worries with growth.
Back home the Nifty, which set a new high of 15,923 on Friday, recoiled and fell nearly 2 percent cumulatively on Monday and Tuesday.
The mid and small caps held their nerve for a day and then fell in line with the bears on Tuesday. For the week only defensives like FMCG and it held up.
To discuss where the Indian markets are heading and what is going on globally, CNBC-TV18 spoke to Jai Bala of Cashthechaos.com; Manish Singh, CIO, Crossbridge Capital; and Nilesh Shah, MD of Kotak Mahindra AMC.
Manish Singh said, “This is definitely just a temporary shake out. What people fail to realise is that by raising inflation expectations as we have seen over past 2-3 months of data in the US the risk of deflation has been taken off the table. That is a significant thing that we are not talking about deflation or disinflation, which was the chatter for many months and few years.”
“So what it has done so far is that we have raised the inflation expectation, which is a good sign and good think but I am not in the camp that sees inflation is going to be a major factor.”
Nilesh Shah said, “We are seeing that globally there is a correction in the market in fear of inflation. My feeling is that this corrections are transient, as long as the third wave is less furious compared to the second wave witnessed by the world and normalisation of economic activity doesn’t get disrupted then these corrections will be transient.”
Jai Bala said, “Global macros and they have actually being signalling for some time that risk-off is coming. I had pointed out several identification points like the Dollar Index, the Canadian Dollar, which is a commodity currency, the copper which is good signal of the economic strength or weakness - they were all signalling the possibility of a large correction. We were just waiting for the break of key levels at 15,440 on the Nifty.”
“Right now the short-term structure says the home market correction, which is a deep one has already started. We are just looking for market to confirm on a break of 15,440 and then the market will roll over from a buy on the dip market to sell on the rise market. So we are just watching 15,450 on Nifty as a very crucial level.”
For full interview, watch accompanying video...

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CompanyPriceChng%Chng
ICICI Bank676.65 20.70 3.16
ITC212.40 5.40 2.61
Wipro599.15 14.95 2.56
SBI Life Insura1,050.45 24.45 2.38
SBI428.90 6.85 1.62
CompanyPriceChng%Chng
ICICI Bank676.65 20.85 3.18
ITC212.35 5.30 2.56
SBI429.15 7.15 1.69
HCL Tech994.25 15.65 1.60
Axis Bank755.25 8.75 1.17
CompanyPriceChng%Chng
ICICI Bank676.65 20.70 3.16
ITC212.40 5.40 2.61
Wipro599.15 14.95 2.56
SBI Life Insura1,050.45 24.45 2.38
SBI428.90 6.85 1.62
CompanyPriceChng%Chng
ICICI Bank676.65 20.85 3.18
ITC212.35 5.30 2.56
SBI429.15 7.15 1.69
HCL Tech994.25 15.65 1.60
Axis Bank755.25 8.75 1.17

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