Nilesh Shah the Managing Director of Kotak Mahindra AMC feels that the Fed will need to convince both debt and equity markets separately regarding the rate cut. According to him investors should not expect an easy entry into the markets. He predicts that a rate cut by the FOMC will lead to increased capital flows into emerging markets. Shah also states that the decrease in US rates should provide support to gold prices leading to a continued bull run. Additionally he does not foresee the Fed cutting rates due to a high deficit until November. He notes that domestic investors are outperforming foreign inflows in the Indian markets on a daily basis. Shah emphasizes that money alone cannot sustain stock prices in the long run; earning power is essential. He anticipates that corrections in the broader markets will be limited and shallow with limited downside for high floating stock counters. Valuations are considered reasonable in the pharmaceutical and banking sectors. Lastly Shah credits SIP inflow and retail investors for supporting the markets.
#fedratecut #ratecuts #fed
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