Indian Markets To Remain Resilient For Longer Period: Ask Investment’s Sumit Jain On Expected Fed Rate Cut

The US Federal Reserve is expected to make an interest rate cut during its September policy decision, which could trigger sharp movements in global stock markets. However, Indian stock markets will remain resilient even if the US Federal Reserve announces a rate cut next month, according to Sumit Jain, Deputy Chief Investment Officer (CIO) of Ask Investment and Wealth Management.

Speaking to NDTV Profit, Jain said that the current situation is not just about markets but also about the significant impact of geopolitics.

“At the end of the day, equities are functions of growth and its volatility, and then how long can we say this growth is continuing? Each market will behave differently. We may see some markets undergoing pain, as currently the situation is not just about markets but geopolitics is playing a significantly bigger role. So, I believe what we would see is some markets doing in a particular manner; other markets may behave very differently,” he told NDTV Profit.

However, Jain was positive about Indian market benchmarks. “India actually stands at a point where I really believe growth rates can continue for a significantly longer period of time. And if you look at the volatility of India versus the other parts of the world, it is dramatically different,” he said. 

Jain added that the markets may remain buoyant in the coming days. “What India presents today is a combination of growth and lower volatility. The lower volatility feeds into less volatility in currency and also relatively less volatility or focus on loss of capital. So, if your volatility is low, the cost of capital may remain subdued. And if you were to think that the cost of capital is also going down globally, markets actually may continue to remain buoyant,” he explained.

The ASK Investment Managers Deputy CIO also expects quarterly earnings to grow at a rate of around 15% in the upcoming years.

“Q1 was very interesting. There were multiple factors that were one-offs. Heatwaves were pretty intense; we had elections, which actually impacted businesses from a short-term perspective,” he said. Except for commodity-related businesses, earnings have grown upwards of 15%, according to Jain.

“Businesses where India is focused are in fine fettle. Despite this short-term phenomenon, earnings growth will increase by 15%. In fact, not only for a year, but for two-three years could be a possibility.”