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Following is a summary of the market outlook provided by Navneet Munot.

Navneet_MunotAbout the Author : Navneet Munot is Chief Investment officer of SBI Funds Management Private Limited. He is also the Director of SBI Funds (International) Private Ltd. As CIO, Navneet leads one of the largest investment team in India which manages assets of over Rs. 50000 crores across various asset classes.

Navneet has over 18-year’s experience in financial markets. Before joining SBI MF, he was executive director and Head of Multi Strategies Fund Boutique at Morgan Stanley Investment Management. Prior to joining Morgan Stanley Investment Management, he worked as the Chief Investment Officer (Fixed Income and Hybrid Funds) of Birla Sun Life Asset Management Company Ltd. Navneet had been associated with the financial services business of the Birla group for over 13 years and worked in various areas such as fixed income, equities, foreign exchange and derivatives.  Navneet has done post-graduation in Accountancy and Business Statistics and also a rank holder Chartered Accountant. He is a charter holder of Chartered Financial Analyst Institute, US and Chartered Alternative Analyst Institute, US. He has also done FRM and is charter holder of Global Association of Risk Professional (GARP). Navneet is an avid reader. His articles on matters related to economy and financial markets have widely been published.

Market Outlook

Emerging markets have been the biggest beneficiary of the global liquidity and thus leading to high volatility on the US Federal Reserve’s statement on tapering quantitative easing. It has been observed for the first time after Lehman Brother’s collapse that all asset classes witnessed a synchronized fall and increased co-relation. Leading the pack was gold with around 11% fall. However, historically Fed tightening has always turned out to be good for the markets as it indicates strengthening of the economy.

Global investors had been over-weight on India so outflows in the emerging market bond and equity funds resulted in FII selling in our market. China has been facing downshift in China’s growth potential and this will be beneficial to India as the commodity prices will go down resulting in lower trade deficit, lower inflation and fiscal deficit.

In the political front , the government is facing pressure due to depreciation in rupee value. And under this pressure to perform the government announced a series of positive measures major one being – a shift in domestic gas pricing formula from fixed price to market linked. The government has been staying put on its commitment when it comes to fuel pricing even during such tough times.

India’s core story remains intact in terms of potential opportunity from consumption, export competitiveness (furthered with recent currency depreciation), improved governance (both corporate and government) and supply side investments.

Macro economic data sets have continued to remain softer than the market expectations ranging from WPI (Wholesale Price Index) to CPI (Consumer Price Index) to IIP (Index of industrial production) to HSBC India Manufacturing PMI. However, on the brighter side the current account deficit improved as exports increased and imports declined mainly due to lower non-oil non-gold imports.

Softer marco economic data has given leeway for additional rate-cuts. Gradual improvement in external sector is expected driven by slowdown in oil and gold imports and increase in export competitiveness due to depreciation in Rupee.

You can download the Market Outlook by clicking on the following link – Market Outlook by Nanveet Munot