Outlook Business: Last year, the view in the room was optimism laced with a dash of caution. As it turns out, the environment today is far better than last year. Interest rates have come off, the economy is showing signs of revival, inflation is cooling down and we also had a good monsoon. So, are there any factors that can offset this recovery and have an impact across asset classes?
Sandeep Das: For the past three consecutive years, we have had high interest rates, poor monsoon, weak economic activity… all of which played out in a sequence. Today, we are looking at the reverse — better monsoon, easing interest rates. We expect another 25 basis points cut in December or in early 2017 and increased consumption led by the 7th Pay Commission. So, we are overweight equities and expect it to yield a good return in the coming year.
Outlook Business: Himanshu, is that your view as well and is there a specific trigger for equities to outperform, because usually you need one big push factor...
Himanshu Bhagat: We are bullish on equities as well. But, there is also a disconnect between the current market valuation vis-à-vis corporate earnings. Hence, any kind of a shock can trigger more volatility. I don’t think there is any one thing that will change the outlook, unless there is a dramatic change in the crude price as we have been a big beneficiary of the same. Apart from that, I don’t see any other event that can derail the momentum.
Rajesh Saluja: The one factor, probably, will be improved earnings which will play out from the third quarter. The transmission of lower interest rates and the impact of GST on branded consumer goods will al