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Rally driven by liquidity, rather than fundamentals

29/03/2016

Interview with Gopal Bhattacharya, Head of Global Markets India at Societe Generale

In an interview conducted by Puneet Wadhwa from Business Standard, Gopal Bhattacharya, Head of Global Markets India at Societe Generale, discusses about the rally as well as the hopes of a rate cut by the Reserve Bank of India.

March has been a good month for equity markets. How long do you see this upbeat mood?

Gopal Bhattacharya: There seems to be some balance and sanity returning to global markets but we might be swinging more to the other side. There could be more optimism than what is warranted by fundamentals. The S&P 500 is trading close to the peak of 2015 but once the effect of the ultra-low level of interest rates are factored in, corporate performance seems average. Though global pessimism seen at the turn of the year was overdone, there is not much in terms of corporate performance to celebrate as yet.

A lot of the current up-move has been driven by liquidity and some bargain buying, rather than a firm conviction drawn on underlying fundamentals. In these conditions, the markets will remain vulnerable to negative news flow. In addition, there will be more discrimination in investment actions and more segregation among markets. So, more divergence in performance may be expected between geographies.

To read the full interview, please visit: www.business-standard.com