Jyotivardhan Jaipuria, founder and MD of Valentis Advisors, spoke to CNBC-TV18 about the current rally in stocks market and outlook.
“The markets are not cheap. We have seen a nice rally and now again valuations have not been exactly cheap. The other thing, which I have been trying to highlight is we have to juxtapose this with the fact that we are probably close to the bottom of the earnings cycle. So we will have a strong earnings cycle going ahead. We could live with a probably slightly higher valuation but probably not at this level. Partly what we are seeing now is the year-end Santa Claus rally, which is probably a phenomenon we get in most of the year-ends. That tends to unwind itself somewhere in January-February,” Jaipuria said on Monday.
Talking about the US Federal Reserve policy expectations, Jaipuria said, “General consensus is that there will be a rate hike by US Fed. I expect a rate hike this year. I think they will probably do a rate hike but it is whether they start giving a view that next year the rate hikes will not be as sharp as what market is factoring in. So the general consensus used to be another four rate hikes next year which has now moved closer to three rate hikes and I think that is where probably we could see better markets for emerging markets (EMs) next year where we see that Fed is probably not going to hike as aggressively as they were hiking this year because the US economy starts to slowdown. So I would say we get a rate hike this year but probably we start getting commentary which indicates that the rate hike next year is not going to be as quick as what was earlier believed."
With regards to Indian markets and upcoming general elections, he said, “India per se over the next four-five months, there would be some focus on politics because that is something, which we cannot ignore in the run up to elections."
"People would have one eye there and generally people don’t like uncertainty. All of us know that if we look at longer-term, which government is formed and all is not very important to the market but at the same time, near the elections people generally don’t want change, they just want status quo to continue so that we can ignore politics and get back to company fundamentals. So to that extent, people will be a little nervous ahead of the elections,” said Jaipuria.
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First Published: IST