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Standard Chartered expects US Fed rate cut in second half
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Rajat Bhattacharya, Senior Investment Strategist at Standard Chartered, believes the Indian equity as well as bond market will draw greater foreign participation in the near future given its strong economy and corporate earnings growth.
A decline in both growth and inflation in the US in the latter half of the year could pave the way for the Federal Reserve to initiate rate cuts, according to Rajat Bhattacharya, Senior Investment Strategist at Standard Chartered.
The US economy slowed sharply in the January-March quarter to a 1.6% annual pace in the face of high-interest rates, but consumers — the main driver of economic growth — kept spending at a solid pace.
US gross domestic product — the economy’s total output of goods and services — decelerated in the January-March quarter from its brisk 3.4% growth rate in the final three months of 2023.
The Fed’s preferred inflation figure is due later today (April 26). Other gauges of price rises in the US remained hotter-than-expected, suggesting the timing of rate cuts may be pushed back.
Indian market, Bhattacharya says, has a unique organic domestic-led growth trajectory, distinct from global trends.
While India’s economic performance is influenced by trends in the US, its robust growth, strong corporate earnings, government expenditure, fiscal discipline, and political stability all play significant roles in enhancing its global standing.
“So, in absolute terms, we are bullish on India, and not just equities we are also bullish on government bonds,” Bhattacharya added.
Also Read | US inflation up again in March in latest sign that price pressures remain elevated
He also highlighted what makes the Indian market valuations explains.
India is still under owned by foreign investors and “as India’s exceptionalism comes through more and more in the coming quarters years. I think you will see more foreign participation in both equity and bond markets, which is what justifies this kind of PE (price to earnings) multiples,” he said.
For the entire interview, watch the accompanying video
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