In an interview with ETMarkets, Subramanian said: “Markets are a function of earnings and liquidity. We have earnings growing solidly with Nifty compounding earnings up 13 percent over the last 3 years,” edited excerpts:
It looks like we are facing strong resistance near 18000. What is your take on the markets for the rest of 2022?
We have seen a good increase in the market in the last 2 months. The Indian markets have risen from around 15,300 levels to 18,000 levels in the last 2 months. Markets are expected to remain volatile through the rest of 2022.
Global headwinds have impacted both corporate profits and increased volatility in the markets. Oil prices have had a direct impact on the Indian economy and most Indian businesses as India is a net importer of oil.
Any worsening of the war situation between Russia and Ukraine will have an implication on crude oil prices which will ultimately impact the profits of Indian companies.
FPI money flowing into Indian markets is certainly a positive sign and additional flows will take further cues from global macro updates.
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After August, where do you think the markets will hit all-time highs in September?
Well, it’s very hard to say that, but one positive from August is that Foreign Institutional Investors (FIIs) have returned to the Indian markets. This has, to some extent, helped the upward move seen in India.
We look forward to interesting times ahead as we are witnessing various macro challenges like inflation, slowdown in the US and Eurozone, COVID restrictions in China, etc., and the war between Russia and Ukraine.
We expect markets to remain volatile. However, the Indian economy appears to be relatively better positioned and has been doing well compared to other emerging and global peers.
But it’s time to be careful considering the pullback we’ve seen in the last 2 months.
What about capex games? Are they worth considering, be it infrastructure, defence, capital goods or metals? Any indication you’ve gotten of June quarter earnings? Which companies are deploying more capital expenditures?
The capex space has certainly seen a lot of activity. Capital goods saw a healthy increase in order intake. We expect overall private capital spending to show strength over the next 2-3 years on the back of increased capacity, utilization and better demand visibility.
The government-backed PLI should also help the growth of the capital goods space in the future. Some of the main capital-intensive sectors, such as cement, telecommunications, oil and gas, have announced multiple expansion plans that they intend to implement in the next 2 years.
The trip back to 18000 was volatile for Nifty50: which sectors are likely to lead the next leg of the rally on D-Street?
The Indian markets have risen from around 15,300 levels to 18,000 levels in the last 2 months. Starting next month we will publish the second quarter figures for India Inc.
Overall, we still see the economy as quite strong across sectors, but multiple challenges related to inflation and higher oil prices could slow momentum.
With respect to sectors, private lenders are relatively better positioned where they have reported lower slippages and provisions and higher net interest margins.
One should also be a little cautious with export-oriented sectors/companies due to concerns about the possibilities of a recession in the US and a slowdown in Europe.
Please share a little about yourself.
It used to run the bancassurance channel where vertical wealth management was a key channel. They seem to like what I did, and I liked what I saw and that’s where my wealth management journey started in 2008 and I’ve loved it ever since.
And because I love what I do, I’m never really stressed about it. I think we should “work hard” when necessary and “work regularly” when business as usual.
How do we compare to global peers? We have seen FIIs return to Indian markets, but do you think a high valuation could be a killjoy?
The FIIs have certainly returned in August. They have become net buyers after 10 months in the spot market. It is too early to say if we see the trend continuing.
September will be crucial as we expect a lot of macro data on both the domestic and global fronts. The Indian markets have risen from around 15,300 levels to 18,000 levels in the last 2 months.
The valuation of the Indian markets’ forward multiple after this rally still appears to be close to its 5-year average levels. As stated above, we are all witnessing global macroeconomic headwinds.
Any negative surprise on that front could derail the momentum of the past two months.
(Disclaimer: The recommendations, suggestions, points of view and opinions given by the experts are their own. These do not represent the views of the Economic Times)