scorecardresearchRich valuations playing a spoilsport for markets, says Andrew Holland of Avendus Capital

Rich valuations playing a spoilsport for markets, says Andrew Holland of Avendus Capital

Updated: 09 Jan 2023, 10:34 AM IST
TL;DR.
Holland said a global economic slowdown would impact India's exports which would distort the balance of payment and put pressure on the currency.
The market has been under pressure due to concerns over global economic slowdown.

The market has been under pressure due to concerns over global economic slowdown.

India is expected to continue its outperformance in 2023. Still, the rich valuation of the market is playing a spoilsport, said Andrew Holland, CEO of Avendus Capital Alternate Strategies in an interview with ET Now.

"It is quite strange that we came into this year with lots of optimism that India was standing out and would continue to do so and attract foreign funds. It does not seem to be playing out that way and China seems to be grabbing the limelight in the short term but it is all about valuations," said Holland.

He said a global economic slowdown would impact India's exports which would distort the balance of payment and put pressure on the currency.

However, Holland added that a pause in interest rate hikes would help India as it will bring flows back to emerging markets.

Holland believes that IT stocks may remain under pressure for the short term because of the evolving macroeconomic situation in the US.

"It goes back to what we have been saying throughout most of last year that unless you have a very bullish view on the tech stocks in the US which is kind of getting better only for the fact that we are expecting interest rates to be on hold at some point, the pain might still be there in the very short term as these companies have to adjust to slowing sales and obviously take a hit on their workforce in terms of reducing costs," said Holland.

For the metal stocks, Holland thinks it is not a favourable time because the demand for metals is expected to fall due to the global economic slowdown.

Holland said that the aggregate demand globally will fall and therefore metal prices will have to come further down from where we are today.

"If we get any rallies, it is probably worth selling into in our view because I do not think in the next one year, China can make up for the kind of recession that we are going to see in Europe, the UK. It’s looking like a mild recession in the US at the moment. It is going to get worse before it gets better for the metal stocks, probably it is the second half of the 2023 trade," said Holland.

Disclaimer: This article is based on an ET Now interview. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.

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First Published: 09 Jan 2023, 10:34 AM IST