WF: Markets hit new highs after the election results, seemingly oblivious of the economic growth worries, fiscal slippage and the ongoing NBFC crisis – and only the last few days of market correction seems to be some form of recognition of these issues. Are we getting too sanguine due to the political environment? Are we under-estimating our economic realities?
Kailash: It is a great question, as it brings us to the fundamentals of what the market is all about. The market is finally about pricing and earnings. The rest of it is all noise. There are events and based on the events, the market responds either positively or negatively. Once the event is passed, the market goes back to reality and looks at the actual corporate numbers, earnings, and other parameters that impact earnings. So, a trade war between US and China will disturb for some time, but you will come back into reality in terms of how the performance parameters are and what are the results declared by the various sectors. Same with the election - Did we factor in such a large majority for the NDA? The obvious answer is 'no'. So the big momentum that we saw in terms of lifetime highs -- once that event tends to die down, then obviously things start returning to normal and people start looking at the numbers, at the corporate performance and earnings.
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