Stick To Long-Term Financial Goals In A Volatile Market

The markets however are expected to remain volatile over the short term as we see multiple central banks such as Federal Reserve and ECB, etc. take affirmative action to temper inflation.

Sanjay Chawla

Chief Investment Officer (Equity)

Baroda BNP Paribas Asset Management India Private Limited

With high levels of inflation expected to persist in the future along with more rate hikes, what is your outlook on the Indian equity markets in the short to medium term?

Crude and various commodities have cooled off from their recent peaks. We do believe that unless there are untoward shocks such as escalation in hostilities between Russia and Ukraine or some major supply disruptions there should be a slow but gradual easing of inflationary pressures. As the monetary authority, Reserve Bank of India (RBI), has indicated, we do see the exit rate for CPI in 4QFY23 to be sub 6 per cent given current conditions. To add, in line with major central bank actions such as the Federal Reserve or the European Central Bank (ECB), we expect the RBI as well to take more rate actions to temper inflation. Thankfully, if the recovery in monsoon in July sustains through the season, it might help alleviate some of the price pressures in food grains, fruits and vegetables.