There are signs of a bubble in certain areas of the Indian equity market, said Arvind Sanger, managing partner of Geosphere Capital Management, on Wednesday, adding that he is trying to position the Indian portfolio to be inflation-proof.

He said, “I do not think the RBI can keep itself separate from where most of the central bankers around the world are going and as liquidity tightens in India to deal with inflation and global cues, some of the sectors remain at risk. So there is a sign of bubbles in some of the areas and I would be cautious about those.”

On sectors, he said, “Real estate is one area that we have liked for a while and what we are seeing there is a good sign. I cannot speak with great details to what this quarter will bring (for IT) and how the guidance will go up, but structurally it’s an area that we have greater exposure to in the last 1-2 years than we had historically because we think the worm has turned structurally and we like it.”

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Talking about the US market, Sanger said that the jury is still out on how sustainable the inflation will be. He said, “A part of the reason the jury is out because we are all struggling to understand how much of this inflation is caused by onetime COVID related disruption factors which are causing both demands for goods to be high and supply chain interruption and how much of it is caused by labour and goods inflation.”

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He said that the market will remain volatile till the time there is clarity on how the US Fed is going to act.

For the entire interview, watch the video