Amit Rathi’s take on expected Budget 2016
With the proposed budget expected to rain hopes and extra expenses this season, the finance expert Mr. Rathi talks about the present crisis, China’s growth scenario and foreign investor’s role in Indian Economy. He is the Managing Director of Anand Rathi financial Services Limited.
Amit Rathi talks about subdued international commodity prices, which allows India to simultaneously effect fiscal consolidation and inflation control, unlike most emerging market economies. He also mentioned that these opportunities should not be frittered away.
A concerned media person asked Amit Rathi if the China’s slow growth as a blessing in disguise for India or a threat to the economy, to which he replied, “A sharp Chinese slowdown impacts India negatively in the short-term, especially by making investor sentiments negative on emerging market economies. In the longer-term, the process is likely to positively impact India by making the country a preferred destination for manufacturing activities and investment. Softer commodity prices due to reduced Chinese demand also would help India — a rare net commodity-importing emerging market economy.
Amit Rathi also has a say on current market trends. He says as he thinks, “Much of the recent bearishness in the Indian equity market is emanating from international developments, mostly from China, and a large part of these are not fundamentally important for India. Consequently, Indian equity seems to be in the oversold zone and therefore, the “extremely bearish” sentiments are not justified. But, so long as the international data flows remain negative and sentiments do not improve; Indian equities are unlikely to post significant gains.
“So taking a short-term call at the market-wide level at this juncture is very difficult. All I can say is that the downside to the Indian equity market from here looks limited,” he said.
At the mention of foreign investors and India being a centre of attraction for them, Amit Rathi says, “The current equity indices levels, valuation multiples and rupee exchange rate level make Indian equities extremely attractive for FIIs against the backdrop of strong macroeconomic and corporate fundamentals. But for an FII facing redemption pressure or taking a global strategic call to reduce equity/emerging market exposures, other factors hardly matter, especially in the short-term.”