CLSA's Vikash Jain says an interim relief rally is possible in December CLSA's Vikash Jain says an interim relief rally is possible in December CLSA's Vikash Jain says an interim relief rally is possible in December An interim relief rally is possible for markets in December but a bigger correction could be seen in the first half of next year. Despite this, in the long term, India’s growth story stays intact, says Vikash Kumar Jain, India Strategist & India Head of Research, CLSA.
In an interaction with the media on CLSA India's Forum 202 Jain said that in the recent months markets have digested several negatives like a weak earnings season, foreign institutional investors (FIIs) moving to China, high inflation, and geopolitical conflicts like the Iran-Israel issue which may lead to a short-term rally in the very near term.
January might be tricky for the markets but nonetheless in the long-term India growth story looks very strong with its sustainable earnings growth and diverse market. He also highlighted other reasons like the government’s emphasis on skilling India, demographic advantage of the country, fastest digitally adopting population with likes of having the best payment system in the world. He is also bullish on the banking sector in the current scenario and says that the current coalition government’s focus on welfare policies could lead to a recovery in the consumption for the lower income category.
On FII outflows he said that after Trump came to power there is an environment of uncertainty in the markets and there could be some dampening effect on the inflows in the emerging markets. He said, “Out of the $900 billion FII AUM (assets under management) in India, over $800 billion is in non-India-dedicated funds. These funds often react to broader EM (emerging market) trends, especially perceptions tied to China, rather than India-specific developments."
He added that India is relatively in a better position than other countries of the emerging markets. With Trump's policies likely to affect the outflows from the emerging markets, India might not see too much effect. "India may not go up in absolute basis but on relative bases it might not fall like other markets." said Jain.