The market went for a strong run after the shift in stance by Reserve Bank of India (RBI) from accommodative to neutral but UR Bhat of Dalton Capital says he is unsure if this will sustain. According to him, US President Donald Trump’s policies pose a huge risk for the market.
“The big problem we have is what can come out of the Trump administration. There are lot of uncertainties, especially regarding the relationship with China or the border tax,” said Bhat while speaking to CNBC-TV18. He says there is not much clarity with what US is going to do and this will keep the market guessing.
Demonetisation took a toll on consumption which led to slowdown in demand. Now, as the note ban pain eases, the other issue that could be a problem for the companies in the consumption space is the rollout of Goods and Services tax (GST). The alternate tax regime could leave the companies in this sector in a state of flux, said Bhat.
The consumer companies are already dealing with the problem of higher commodity prices and whether to pass the price burden on to the consumers as there is already a shortfall in the demand.
Further, Bhat said that the earnings growth did not support the market in a big way as they have been a lacklusture. “The markets can go on their own without the earnings support,” said Bhat. He added that with GST coming in, the market cannot Bank on earnings growth for support.
