Trideep Bhattacharya of Axis AMC on Monday said that strong growth and inflation cycle is playing out currently in the market. He also warned that the low growth and high inflation combination hasn't been properly priced in by the street as yet.

“The market view, over the medium term, i.e. the next 2-3 years, is a chance of a strong economy cycle to play out. The key elements of the economic cycle would be high growth and high inflation,” he said in an interview with CNBC-TV18.

According to Bhattacharya, low growth with high inflation is a big unpriced risk in the market.

“For whatever reason, if growth disappoints in about a year from now, it is not our base case, but if growth disappoints and inflation continues to be high, that is a risk scenario in my opinion which at the moment is not factored in the market. The stocks might see an actual downside if that were to happen,” he elaborated.

Pricing power is likely to be a key theme in the medium term. “In this high growth, high inflation environment, the theme to keep in mind is pricing power. That will be the single most important theme to play with over the next 1 year or so irrespective of the sector because not everyone will be able to pass on the cost increases to the customers without impacting their demand,” he said.

For the full interview, watch the video.

(Edited by : Abhishek Jha)

First Published:Jun 14, 2021 5:52 PM IST