Davos-2022
Davos-2022
Davos-2022
Davos-2022
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Rate hikes unlikely to hinder rally in equities: White Oak Capital CEO

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Equity markets are unlikely to face any challenge due to rate hikes, believes Aashish Somaiyaa, Chief Executive Officer of White Oak Capital Management. Somaiyaa sees blockchain technology as a more interesting area to keep a watch on, rather than cryptocurrencies. Interestingly, the market veteran is of the opinion that cryptocurrency can evolve to be an alternative asset class.

Rate hikes unlikely to hinder rally in equities: White Oak Capital CEO
Equity markets are unlikely to face any challenge due to rate hikes, believes Aashish Somaiyaa, Chief Executive Officer of White Oak Capital Management.
“While the timing is hard to predict, it is probably likely within the next 6 months or thereabouts and I do not see any challenges to equity markets due to rate hikes,” Somaiyaa told cnbctv18.com.
“I do not wish to oversimplify and I know there are multiple nuances and cause-effect relationships but rising interest rates are usually one of the signs of economic traction. Especially so when we know rates were cut so sharply purely to provide “life-support” to an otherwise failing economy post the onset of COVID-19 and related economic disruptions. Given the circumstances, no foreseeable hike in interest rates would be a bigger concern on economic prospects than the other way round,” he explained.
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Somaiyaa is of the view that a correction may happen for any reason whatsoever.
Several market participants have been awaiting a correction for quite some time now, taking into account the surprisingly steep rally from mid-2020 till October 2021.
Considering that the second wave was quite deadly and yet lockdowns and economic disruptions were not as severe as the first wave, Somaiyaa thinks one could invest on the basis of valuations and economic prospects going forward. He also noted that the recent selling by Foreign Portfolio Investors (FPIs) does not seem to be for India specific reasons or India centric at all, and suggested to take advantage of this scenario.
Further, he said that even if the market falls another five percent from here on, retail inflows into mutual funds are likely to continue unabated.
Talking about market valuations, the expert said that although valuations have cooled off meaningfully, “one can’t yet call it a ‘screaming buy’ but this is fair value or even attractively valued considering the economic prospects and impact of government reforms. Further, our macro situation has improved considerably”.
“By some estimates we are now at 21-22 times FY22 earnings and under 19 times FY23 earnings,” Somaiyaa pointed out.
He sees investment opportunities in the financial space as several stocks in the sector have corrected quite sharply despite reporting good earnings. Further, core sectors driven by private as well as government capital expenditure are expected to show some traction going ahead.
Another point of discussion was cryptocurrency, which is gaining popularity as an investment option. Interestingly, the market veteran is of the opinion that cryptocurrency can evolve to be an alternative asset class.
Somaiyaa sees blockchain technology as a more interesting area to keep a watch on, rather than cryptocurrencies.
“One can imagine multiple parts of the market migrating to blockchain technology and I would be most excited to invest in businesses or sectors that participate in the blockchain evolution and facilitate migration. As far as crypto is concerned, for me, there are many unanswered questions. I cannot see how it serves as a currency or a medium of exchange but maybe it can evolve to be an alternative asset class,” he said.
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(Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)

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