Hiren Ved, director & CIO of Alchemy Capital Management, spoke to CNBC-TV18 about the market fundamentals and select stocks.
“We will have to see that there is some respite in the economy and in the first place we have to see that there is no negative growth and it flat lines and there is hope for positive. So whether it's auto numbers or credit growth, I think all the lead indicators have to stabilise at some point in time for people to get that confidence that you indeed hit a trough,” Ved said on Tuesday.
“We need a few good news, we need a couple of large distressed assets to get resolved one way or the other, fresh capital to come in and somebody willing to take that risk to infuse capital in some of these stressed companies. One or two instances like that and you can see that some sort of confidence can come back, but until then we have no choice but to be resilient,” added Ved.
According to him, the rate transmission is slow because of non-banking financial companies (NBFCs) stress and lack of lending.
Talking about the money reversing back to India from China, he said, “I do not think that it can reverse anytime soon. Some of those markets are far cheaper than our markets and there probably the risk of the trade war is already priced in because that has been doing around for a longtime.”
“These are cycles that we see. We have seen that in the past. I refuse to believe that at the end of the day people won’t come back to Indian markets, but we may have to spend some more time here,” said Ved.
On rate cut front, Ved said, "The market doesn't usually rally in early part of rate cut cycle.
“Rate cycle starts to go up because there is some inflation and inflation comes with some demand and pricing power. Today we do not have pricing power, but the fact of the matter is that not only the demand is soft but structurally inflation has also come down. So there is a place for interest rates to come down and stay down structurally as compared to what we have seen in the last couple of years, but in the initial phase, we still have to digest that how far this slowdown is likely to be persist,” he added.