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    India will continue to be a favoured market over other emerging markets, says Ambit Capital

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    India will continue to be a favoured market over other emerging markets, says Ambit Capital

    India relatively stands out from other emerging markets (EM) in terms of liquidity and currency, and it will continue to be a favoured market, said Pramod Gubbi, MD & head of equities, Ambit Capital.
    "Compared to other EMs, the Nifty and the Sensex has clearly outperformed, but the broader market correction has been steeper," said Gubbi.
    One should expect significant volatility in the market this year making further draw down possible starting with global factors in the form of continued tightening of liquidity as US Fed rolls off quantitative easing (QE), and with European Central Bank (ECB) also hinting at end of QE, he said.
    “So global liquidity tightening, US treasury yields close to 3 percent. There is risk to emerging market assets as seen in the outflows and those could continue, causing further weakness,” said Gubbi.
    Although the domestic economy is picking up on the growth path, there are concerns emerging around current account deficit, inflation and fiscal deficit slipping in the election year, according to Gubbi.
    However, domestic inflows continue to be strong, which could cushion any catastrophic fall, he said, adding that one cannot rule out a 5-10 percent fall.
    Sector wise, he said with the government spending in action and expectations of normal monsoon, the consumption space should be in focus. Wage growth is also picking up, he said.
    One can look at private sector financials on back of market share gain from PSU banks he said, adding that IT is also seeing a pickup in global demand and the weaker currency is helping them.
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