Madhav Dhar of GTI Capital said currently the banking sector is on strong footing but my apprehension is that private investment cycle kicking off need to be seen, though banks are not lending due to NPA problems.
The market has been rangebound after recent correction with the Nifty holding above 11,400-mark amid Turkish lira crisis-driven fall in global currencies against the US dollar.
The rate tighening is happening in the US on the hopes that economic growth is on track and emerging markets have been indicated about tighening.
"The current interest rate cycle is not synchronised with global equity markets but the current cycle is not different to Mexican peso crisis 1994 and financial crisis 2008," Madhav Dhar, GTI Capital Group told CNBC-TV18.
He said, "We are at late stage of tighening. Currently US needs higher interest rates while emerging markets want low rates."
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Margin has been picking up, growth picking up with rising interest rate risk. Economy growth in the US and India is strong, he believes.
He feels the Indian market will continue to move higher for couple of years but one should look for exit sign.
Political Risk
The market will gradually shift its focus to politics in October-November as state and general elections will take place from December 2018 onwards.
Dhar is sceptical about political risk. The impact of political risk on market is unpredictable, he said. "I am least concerned about political risk on stock market in India as Indian market has also done better under coalition governments."
According to him, if there is sense of change in politics and also dramatic change in economy, then there could be a major risk to the market.
In the US, there was dramatic change happened in politics followed by Donald Trump's reforms which helped the world's largest economy come on growth track. "I don't see that to happen in India," he said.
He further said reform change in India is definitely strong, and current administration and past administration are distinguishable.
Corporate Banks
He does think that things are behind in case of non-performing asset (NPA) cycle after bankruptcy code reform. "In fact we are at lowest point of NPA cycle."
Recapitalisation of balance sheet, natural growth in balance sheet remain to be seen going forward, he feels.
Dhar said currently the banking sector is on strong footing but my apprehension is that private investment cycle kicking off need to be seen, though banks are not lending due to NPA problems.