The next two-three quarters are likely to be rough for the equity markets, said Adrian Lim, Investment Director – Asian Equities, Aberdeen Standard Investments, advising investors to be cautious about too much exposure.
Lim said the rally in global equity markets is liquidity-driven and added that "it has gone a bit ahead of itself, not just in India but across the region as well".
“Obviously a recovery will be quite significant, but that will be measured against the lowest points of the economy which we haven’t reached yet. So, I think the next two or three quarters are still going to be very rough and I would be cautious about too much exposure in the markets at these levels," said Lim.
Lim advised investors to look for resilience and financial strength in the companies they invest in.
Speaking about banks, he said that weakness is expected not just in the retail loan book but also in the corporate segment. "We do expect fragments of stress in the credit system.”
“We have already seen that the credit system remains challenged, there are pockets that need capital... So, it is very important for us to be comfortable with the strength of the franchise as well as the capital reserves that these institutions have,” he added.