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Indian midcap space needs to catch up, says Bank Julius Baer & Co

Updated : June 20, 2019 12:04 PM IST

Mark Matthews, managing director of Bank Julius Baer & Co, said that it was time for Indian midcaps to catch up as investors were still not keen on investing in the space due to the losses occurred.

“I guess people aren’t willing to move into them (midcaps) yet because they still remember the losses they made in them but to me, that is the space which looks appealing and I think when that space catches up, then the index can move higher. However, for now, the midcap catch up is what needs to happen," said Matthews in an interview with CNBC-TV18.

Reacting to the Fed decision, he said, “I think clearly the easing has already started. On a net basis, central banks have been cutting rates this year. Last year on the net basis, they were raising them. What Mario Draghi said two days ago was very indicative of more stimulus to come in Europe probably in the form of qualitative easing and that I think is the key for emerging markets because that could prevent the dollar from weakening."

The US Fed has left its lending rates unchanged at 2.25-2.5 percent. The Fed statement was dovish primarily on inflation and neutral on growth. The Federal Open Market Committee (FOMC) maintained its stance on the economic outlook as 'moderate' while the jobs market remained 'solid'.

Talking about the upcoming Budget, he said, “I think most people realise that the capital gains outweigh the currency weakness. I don’t think foreign investors have ever put as much emphasis on the Union Budget as domestic investors. I don’t entirely understand why in India it gets so much attention but clearly the focus — now that there is a strong majority — will be for further reforms particularly in labour and agriculture and those will be watched.”
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