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India facing a deteriorating external environment, says Sanjay Mookim of BofAML

Updated : September 25, 2018 21:39:18 IST

Sanjay Mookim, director - India Equity Strategy at Bank of America Merrill Lynch, spoke to CNBC-TV18 about the current trends in equity market and shared his outlook.

“We were highlighting that India is facing a deteriorating external environment – dollar liquidity was predictably going to get tighter as it has and the internal dynamics were going to get messier with elections coming up. Therefore the domestic sentiment which had held up the market so far was likely to break," said Mookim.

Also Read: Rural focus themes expected to do better this year, says Sanjay Mookim of BofAML

According to Mookim, "More than predicting where the index would be it would be better to focus on the multiples of the companies. The multiples need to come down some more because even now the Indian aggregate multiples are still very high relatively to other emerging markets".

"So if this is a correction, then there is still significant room for multiples to normalize," he said.

When asked if we are staring at a systemic risk in financials, he said, "One hopes not and hope that there is not contagion in terms of solvency of any of these companies. It is too early to talk about those issues but there will be margin impact on these wholesale funded entities and probably growth issues as well but too stretched to imagine that we are questioning solvency of these stocks."

“This is probably more an indication of positioning of the market. People were overbought perhaps and some of these stocks were expensive to begin with,”

he said.

 
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