Saurabh Mukherjea, founder & CIO, Marcellus Investment, has said that the Federal Reserve could deliver at least one rate cut ahead of the US Presidential election in November this year. Speaking to ET NOW Swadesh, Saurabh said that a low interest scenario will be a key trigger for the emerging markets including for India. He also exuded confidence that foreign investments in India will continue to swell going forward as "India has more long-term compounders than China".

"India's economy is strong and it will continue to do well regardless of the Lok Sabha election outcome. Companies' are performing, earnings are good. FIIs investment will definitely see an uptick. They (FIIs) do have some concerns over valuation... but that is not a new challenge for Hindustan (India) and we can deal with that. Indian markets have been consistently more expensive than rest of Asia and yet our compounding has been much better than other Asian countries over the last 20 years. So, the situation is favourable, foreign investments will continue to swell," he said.

When asked why he feels FIIs will pump more money in the Indian markets, he said, "See, the interest rate scenario will improve going forward. We recently saw that the inflation numbers in our country... it is currently hovering around 4.50 per cent. This was around 9 per cent 1.5 years ago." "Also, the US inflation is showing signs of cooling. It is most likely that the Federal Reserve will deliver at least one rate cut in August-September ahead of the Presidential election in the US. So the interest rate will go down and this will help high quality Indian equities. This would be a key trigger for the emerging markets including for India," he said. "In such a situation, India will do well because our country has more long-term compounders than China."

"Another concern is regarding the government at the Centre. At present, India has a coalition government. So the debate regarding the growth will be put to rest in the next two quarters. I am pretty sure that the growth will sustain and the upcoming budget in July will focus on the consumption sector and encourage manufacturing. I don't see any meaningful dent in the economy and this will attract foreign investors," he said.

"If you look at the overall market multiple... the NIFTY multiple is currently at 22-23. But the valuation of high quality stocks are still around 6-7 years of lows. HDFC Bank, Asian Paints, Bajaj Finance, Divi's Lab, Dr Lal PathLabs... in fact stocks like HDFC Bank's valuation is currently at two decades lows. Investors should focus on the growth of companies instead of valuation. Focus on companies that have superior compounding track record," the ace investor said.


2024-06-15T06:44:24Z dg43tfdfdgfd