Sharing his views and outlook on the Indian markets on Friday, Dhiraj Agarwal, co-head equities at Ambit Capital, said that he expects India’s H2FY21 gross domestic product (GDP) to see a sharp rebound. A dovish Fed stance bodes well for emerging markets like India, Agarwal said.

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Speaking about US liquidity, he said, “When the US liquidity is aplenty and when Fed is pumping money, India tends to go into a bit of positive coordination with the US. However, the warning sign there is that while in the initial phase of liquidity gush, the correlation with the US market and the positive impact is very high. Somewhere like a year or a year and a half down the line, the market still restarts to refocus on earnings. This can continue for a while more.”

In the non-banking financial space, Agarwal said that growth would a bigger factor to track rather than asset quality.

“We as a house are selectively focused on NBFCs. There are a number of those players. However, if you take a two-three year view, more than NPLs what we should focus on is are they back to being a growth sector or they will be valued as an ex-growth sector. That is where over a two-year timeframe, financials might come under pressure but the near-term there is a mean reversion story,” he added.

India’s H2FY21 gross domestic product (GDP) may see a sharp rebound, he further mentioned.

“Q1 GDP was down -25, Q2 estimated to be -5, the full-year estimate is at -5 or -6, so Q3 and Q4 is bound to be good for the whole year to end at -5 or -6 range after first two quarters are so bad,” he said.

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