India is in a 'central bank bear market' which will end when the US Fed will stop hiking rates and begin quantitative easing, said S Naren, ED & CIO, ICICI Pru AMC in an interview with ET Now.
"We have been talking about the central bank bull market in 2021. The central bank bull market ended now we are having a central bank bear market. The central bank bear market ends when Mr Jerome Powell comes and says now I am through with the hiking cycle and I am going to stop hiking or I am going to do quantitative easing," said Naren.
He explained central bank bear market can pull stocks too much below fair value also.
"How far this central bank bear market will take people is a question for which we do not have answers. We are going to be watching the Fed. We are going to be watching Mr Jerome Powell and we will see how long he is willing to allow a central bank bear market. My own view is they cannot afford it to be long so hopefully, in three to six months’ time they will end the central bank bear market and that is what… maybe is my wishful thinking or my hope I do not know, one of the two at least is there," he told ET Now.
Naren said we are not at maximum pessimism yet as we have had domestic investors who have not allowed the point of maximum pessimism to come in actually.
"I do not think that in equity, we are at that point of maximum pessimism and that is the reason over the last one year, we have been talking asset allocation and SIPs," he further said.
"if there were to be some redemptions and markets were to go down from here, the equities would become very attractive and that is the reason over the last six months, we have been focussed on systematic investment plans, systematic transfer plans, booster STPs and asset allocation. That is the framework that we have had to do although we always thought that central bankers run equity markets and not equity mutual funds and that has been the challenge for all of us sitting in India," Naren told ET Now.
Disclaimer: The views and recommendations made above are those of the analyst and not of MintGenie.