Perspective on US Fed rate cut by Dr. Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital
Below the Perspective on US Fed rate cut by Dr. Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital
“Fed rate cut combined with a India-US trade deal is likely to be a positive sentimental boost for both domestic and FII investors. Most sectors could benefit positively since even where the seeming impact is negative, the volume growth will more than compensate for it. For example, IT would face USD depreciation which is apparently bad, but the chances of increased outsourcing in future is high. Of course, only rate cuts will not help in increasing outsourcing spends; rather, GDP has to be high, inflation in control, and rate cuts cycle in play are required. Only when all 3 are there together, could the outsourcing spends increase significantly. Similarly, banks, nbfc, housing finance etc. could have top line reduction or slowdown possibly on the current book, but the demand for loans is likely to increase the volumes substantially, giving a higher than normal revenue growth outlook during a rate cut cycle where RBI is even more likely to step in domestically. Pharma and US exporters could have a negative impact from the rate cut due to the USD depreciation, but this could be more than compensated by a favourable US-India trade deal. We think the India market is poised for a positive outlook, while the rest of the world is also likely to behave positively. Ths US markets, in our opinion, the mid and small caps will see a more positive outlook compared to the large caps and especially large cap techs, due to them being already fairly valued or possibly overvalued.”
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