The possibility of hitting June lows at an index level cannot be ruled out as we can’t be insulated from risk aversion in global equities, says Kunal Bhakta of First Water Capital.
The Reserve Bank of India (RBI) has behaved in quite a calibrated manner and will continue to drive India’s monetary policy prudently, says Kunal Bhakta of First Water Capital in an interview with Moneycontrol.
On corporate earnings, the seasoned investment professional with 15 years of experience in capital markets says it’s going to be a mixed bag with a subdued performance likely in commodity businesses for the September-ending quarter.
With the current weakness in the market, the Co-founder of First Water Capital says the possibility of hitting June lows at an index level cannot be ruled out as India can’t be insulated from risk aversion in global equities.
Do you think our economy is entering a comfort zone soon?
I think India as an economy has been resilient and a clear standout and was never out of a comfort zone so to say. I would expect India to be able to navigate through the current global headwinds without much damage.
Do you expect India to become the third-largest economy by 2030, outpacing Japan?
This is a virtual certainty at this point and it’s not a question of whether but a question of when. It seems quite plausible that India will overtake Japan by 2030.
Do you think the second half of FY23 will be the best time to start accumulating IT stocks?
I would tend to broadly concur with this; valuations for the IT sector have corrected meaningfully and a part of the impending impact on business from the slowdown in the US will be cushioned by currency tailwinds and cost rationalisation measures at the industry level, including a reduction in attrition levels. While it’s tough to call a bottom, this clearly seems to be a good time to start accumulating.
Do you expect the September 2022 quarter earnings to be much better than the previous two quarters?
It’s going to be a mixed bag; commodity businesses will likely see subdued earnings in the September quarter as compared to the previous two quarters.
At the same time, users of commodities such as pipes, construction, etc, will see better numbers. Autos and ancillaries will do well too, partly due to moderation of commodity prices and partly due to easing semiconductor shortage.
Do you think the possibility of hitting June lows is increasing given the subdued global environment?
The possibility of hitting June lows at an index level cannot be ruled out as we can’t be insulated from risk aversion in global equities. However, there will be clear outperformers that will emerge.
What is the path that RBI can think of after the September policy meeting as most of the experts now expect a 50 bps hike in repo rate?
The RBI has behaved in quite a calibrated manner and will continue to drive India’s monetary policy prudently. I don’t expect them to take any knee-jerk measures and may not look to go out of the way to support the INR at this juncture, given that everything is relative and India’s export competitiveness cannot be ignored.
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