Even though there could be some headwinds in the next few months, the market will be at a higher level in the next six months and it is time to start deploying cash in the market, said Andrew Holland, CEO, Avendus Capital Alternate Strategies, in an interview with ET Now.
"Do I think markets will be higher in the next six months? The answer is yes. Do I think that there could be some headwinds which bring markets down in the next few months? The answer is yes because of unintended consequences of tightening and earnings downgrades globally. By October, I think the Fed will stop increasing interest rates because the damage that has been done to the global economy will be there to be seen," Holland told ET Now.
"I have talked in the past about cash being king and keeping as much cash as possible. As markets fall, probably it is the time to get more constructive and start putting money to work," he added.
Holland believes the market will be at a higher place six months down the line as the US Fed may stop increasing interest rates or go on pause by October because of a possible recession and also, there may be some kind of move towards peace talks between Russia and Ukraine which will bring the oil prices down and that whole inflation will become a deflation trade.
"If the Fed goes on pause, then obviously the interest rate differentials will start to kick in again and that will bring the dollar down from where we are today," Holland said.
Holland is positive about the autos and the banking sector. He finds the IT sector suitable for betting for the very short term.
"The deflation trade will work towards the end of the year and by the end of the year, we will start to see the dollar fall. All of that is good for risk assets and for India. Do I want to play this through IT? I might do it in the very short term because it is a safety valve for me; but if I am going to play the inflation trade, I am going to be looking at autos and the banking sector. Those are the two sectors I really want to get involved in," said Holland.
Disclaimer: This article is based on an ET Now interview. The views and recommendations made above are those of the analyst and not of MintGenie.