Pacific Paradigm Advisors expects some consolidation in the Indian equity market in the near term, Punita Kumar Sinha, managing partner, said in an interview with CNBC-TV18, while adding that easy money has been made in the Indian equity market.
She said, “It has been more than a year of pretty healthy and strong returns despite the pandemic, but now there could be some consolidation, pause, or perhaps this rally could continue because liquidity still remains strong; and in some parts of the world, the economies are opening, particularly in the US, everything is back to normal, but there is a big contrast between what we are seeing in the US, and what we are seeing in India in terms of how the economies are diverging. However, with inflation fears now coming to the forefront, there could be more focus on that and some consolidation is likely.”
On the IT space, Sinha said, “These are the safe and steady stocks in the environment that we are in. These companies are well-positioned for this cycle and there is a lot of innovation happening. Every company is looking for technology, transformation, digital, due to COVID, and that trend is here to stay. Also, the inflationary environment that they are getting into potentially, these companies could still be safe plays to remain invested in.”
On the auto sector, Sinha believes that recovery could be sustainable, and expects both demand and earnings to improve, going forward.
As far as the US is concerned, she said that the US Federal Reserve’s comments could slow down equity markets. “It might change the tone in the market. The market has had a phenomenal run from the beginning of the year, and since March last year,” said Sinha.
She is also sceptical of the US market as earnings growth could be relatively lower.
For the entire interview, watch the video.