Andrew Holland expects domestic inflows to slow down if volatility continues

Market Outlook
Andrew Holland

Andrew Holland

Domestic inflows are likely to slow down if the Indian market continues to be volatile over the next few months, Andrew Holland, CEO, Avendus Alternate Strategies, has said.

The global markets could fall another 5-10 percent, as the narrative had changed from “buy on dips” to “sell on rise”, Holland told CNBC-TV18 on May 9.

“There is a lot of negativity in the market. The Fed is likely to hike rates aggressively due to surging inflation. You can see what happened in the UK, they hiked rates. There is stagflation in Europe. We don’t know what will be the Fed’s next move. My fear is what will be the consequences of this aggressive tightening”, Holland said.

In the last seven months, foreign institutional investors have sold equities worth $ 22.52 billion, while domestic institutional investors bought shares worth Rs 2.10 lakh crore.

At 1.50 pm,  equity benchmarks were off the day’s low but were still in the red, with the Sensex down 318 points, or 0.58 percent, at 54,518 and the Nifty was 96 points, or 0.58 percent,  lower at 16,316.

The markets were trying to digest the rate hike and rising global inflation would likely increase pain across the world, he said.

Holland said he was bullish on the Indian story but it couldn’t be isolated from global factors.

The Federal Reserve recently raised its key rates by a half-percentage point in its most aggressive move since 2000 and signalled that further large rate hikes were to come.

Investors will be keenly following European Central Bank (ECB) president Christine Lagarde’s speech on May 11. Lagarde will offer insights on the likely monetary policy action by the ECB in June. The same day, the US will release its inflation data. A preliminary estimate for yearly US inflation is 8.1 percent against the old print of 8.5 percent.


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