US Fed hike to cap upside for Indian stocks: Pratik Gupta of Kotak Securities

US Fed hike to cap upside for Indian stocks: Pratik Gupta of Kotak Securities

Gupta expects that the outflow of foreign capital from India towards Chinese markets could curtail given the re-emergence of COVID-19 in the Middle Kingdom.





Mumbai / March 15, 2022 / 10:16 AM IST





Upside for Indian equities will be capped because of the US Federal Reserve raising interest rates as the withdrawal of liquidity affects growth markets like India, Pratik Gupta, chief executive officer and co-head of institutional equities, Kotak Securities, told CNBC-TV18 on March 15.

Gupta, however, also does not see the potential for large drawdowns for Indian equities given the resilience that the market has shown in the face of geopolitical crisis in Europe and the recent decline in global crude oil prices.

Despite the over 10 percent correction in the domestic stock market from record highs, the MSCI India index trades at 20 times one-year forward earnings as against 12 times price-to-earnings for the MSCI Emerging Market index.

“The rate hikes by the US Federal Reserve are a more structural risk for Indian equities,” Gupta told CNBC-TV18.

That said, Gupta believes that the outflow of foreign capital from the stock market towards Chinese markets could curtail given the re-emergence of COVID-19 in the Middle Kingdom.

Chinese markets have benefitted