Rate cuts appear to be a real possibility before December 2023, as the economic slowdown has impacted major economies. In an interview with ETMarkets, Vinayak Magotra, Founding Member, Investment Product-Centricity, said, “The rate cycle has slowed from 50 basis points to 25 basis points across countries; if inflation is brought down to the respective central banks’ target ranges, we can expect a pause in rate hikes or even cuts.”
Vinayak Magotra is a Founding Member of Investment Product-Centricity, a global investment firm that provides world-class investment advice to investors worldwide. He is an experienced financial market professional with a diverse background, having worked across asset classes, managing money and building product-centric models. He combines his strong industry knowledge and analytical capabilities to provide comprehensive investment solutions to his clients.
External events are weighing on market sentiment, so investors should monitor interest rates across different economies, paying particular attention to central bank commentaries, as this will provide a better understanding of their views on the overall economic trajectory, inflation, and job market. While April may be a short time frame to predict how the market will move, valuations are returning to more comfortable levels following a recent correction, and high-quality stocks may be accumulated at lower levels.
Recently, Finance Minister Nirmala Sitharaman hiked the STT on the sale of options, limiting potential traders – risk management should remain a priority to avoid losses. For long-term wealth creation amid a rising interest rate scenario, investors should allocate funds across asset classes, maintaining a balance between equity and debt.
The Indian IT sector is estimated to generate $245 billion in revenue by the end of the financial year, with investors should stay mindful of the potential for layoffs and consolidation. Despite current issues, tech stocks have high potential for growth and buybacks.
Overall, investors must focus on high-quality assets and stay consistent in their approach, as this will prove beneficial in the long run. In uncertain times, it will be wise to use sound risk management practices and avoid giving in to emotions.