Latest news with #AjayRajadhyaksha
Economic Times
28-05-2025
- Business
- Economic Times
Is the recent dip in Indian indices simply a bull market correction?
That said, short bursts of foreign inflows into markets like India remain possible, as we're seeing now. But in uncertain times as these, such flows shouldn't be mistaken for sticky capital. As always, hot money buys the dip and sells the rip. Despite a recent market rebound fueled by hopes of US-China trade negotiations, concerns linger about rich valuations and slower growth in India. While domestic investors are driving the rally, global investors remain cautious due to uncertainties surrounding US tariffs and their potential impact on the global economy. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: The stock market often thrives on narratives. When there is limited hard evidence to sell a story in the market, a narrative takes root, giving investors clarity and conviction to make sense of ongoing events. In India, as equities claw their way out of six punishing months, a new narrative that's gaining ground is: the recent market decline was merely a ' bull market correction '. For many bruised investors, the interpretation is comforting. But in a world riddled with complexities-from the haze over the economic fallout of US tariffs to the US debt problem-this interpretation risks masking deeper issues in the April, Donald Trump's tariff policy has been the biggest driver of the market. After tumbling in response to the US president's reciprocal tariff announcement in early April, the market has seen a relief rally after the US paused the tariffs for 90 days and initiated negotiations with China. The rebound helped Nifty cross the 25,000 level for the first time in seven months recently, while foreigners are on track to have made the highest monthly purchases so far in 2025 in May, prompting a section of the market to believe that the bull market has picked up from where it left off last recent momentum, if uninterrupted, may well carry the market to levels beyond the comprehension of most. Still, a rally fuelled by rotation of hot money can't be confused with a bull market. Long-term foreign money is far from bullish on India for now. Though global fund managers acknowledge the country's economic growth prospects are superior to peers in the region, they contend this is not enough to justify the rich share valuations, as reflected in the commentaries of various global macro watchers. Ajay Rajadhyaksha, global chairman of research at Barclays, said in a recent interview that India's macroeconomic environment over the last 6-9 months has not been terrible, but it's mediocre relative to where it was 18 months another interview, Christy Tan, MD and investment strategist, APAC, Franklin Templeton Institute, said for the Indian equity markets to go from strength to strength, there must be stronger economic drivers, and those are the discomfort over slower growth and rich valuations is evident. This has been reflected in the actions of knowledgeable investors recently. In the March quarter, most of the large individual investors held back on large stock purchases-a telling sign of the smart money in most recent large bulk deals-where company promoters have sold their stakes-it's mostly been domestic mutual funds that have been buyers. Most overseas funds have not participated in such deals. It's not because local fund managers are super bullish. Most of them are forced purchases to deploy the uninterrupted flow of local money into their why are promoters, big individual investors and global investors treading cautiously while domestic bulls charge ahead? It's the uncertainty over the effect of the US tariffs on the global economy. These days, seasoned money managers prefer to take every quarter as it comes to gauge the impact of delayed fresh investments and dampening CEO confidence. US tariffs are still three to five times higher than they were before Trump returned to power, amplifying the risks of stagflation-a combination of high inflation, stagnant economic growth, and elevated unemployment. And Trump's pause on tariffs is to end on July heightened risk perception is also driving a shift in global asset allocation. After years of being overlooked, fixed income is once again central to investor portfolios. Safety is taking precedence over aggressive growth. In India, this shift is playing out through a pivot toward hybrid products. Domestic fund managers are increasingly pushing multi-asset allocation funds and arbitrage-based hybrids over pure equity the US grapples with its mounting debt burden, rising Treasury yields, and a weakening dollar, global investors are reassessing risk. Bonds are back in favour, and capital is shifting to safer terrain. Historically, a falling dollar has triggered flows into emerging markets like India and China-but this time, investors are revisiting familiar playbooks more cautiously. That said, short bursts of foreign inflows into markets like India remain possible, as we're seeing now. But in uncertain times as these, such flows shouldn't be mistaken for sticky capital. As always, hot money buys the dip and sells the rip.
Time of India
28-05-2025
- Business
- Time of India
Is the recent dip in Indian indices simply a bull market correction?
Mumbai: The stock market often thrives on narratives. When there is limited hard evidence to sell a story in the market, a narrative takes root, giving investors clarity and conviction to make sense of ongoing events. In India, as equities claw their way out of six punishing months, a new narrative that's gaining ground is: the recent market decline was merely a ' bull market correction '. For many bruised investors, the interpretation is comforting. But in a world riddled with complexities-from the haze over the economic fallout of US tariffs to the US debt problem-this interpretation risks masking deeper issues in the background. Since April, Donald Trump's tariff policy has been the biggest driver of the market. After tumbling in response to the US president's reciprocal tariff announcement in early April, the market has seen a relief rally after the US paused the tariffs for 90 days and initiated negotiations with China. The rebound helped Nifty cross the 25,000 level for the first time in seven months recently, while foreigners are on track to have made the highest monthly purchases so far in 2025 in May, prompting a section of the market to believe that the bull market has picked up from where it left off last year. The recent momentum, if uninterrupted, may well carry the market to levels beyond the comprehension of most. Still, a rally fuelled by rotation of hot money can't be confused with a bull market. Long-term foreign money is far from bullish on India for now. Though global fund managers acknowledge the country's economic growth prospects are superior to peers in the region, they contend this is not enough to justify the rich share valuations, as reflected in the commentaries of various global macro watchers. Ajay Rajadhyaksha, global chairman of research at Barclays, said in a recent interview that India's macroeconomic environment over the last 6-9 months has not been terrible, but it's mediocre relative to where it was 18 months ago. In another interview, Christy Tan, MD and investment strategist, APAC, Franklin Templeton Institute, said for the Indian equity markets to go from strength to strength, there must be stronger economic drivers, and those are missing. Clearly, the discomfort over slower growth and rich valuations is evident. This has been reflected in the actions of knowledgeable investors recently. In the March quarter, most of the large individual investors held back on large stock purchases-a telling sign of the smart money restraint. Live Events Similarly, in most recent large bulk deals-where company promoters have sold their stakes-it's mostly been domestic mutual funds that have been buyers. Most overseas funds have not participated in such deals. It's not because local fund managers are super bullish. Most of them are forced purchases to deploy the uninterrupted flow of local money into their schemes. So, why are promoters, big individual investors and global investors treading cautiously while domestic bulls charge ahead? It's the uncertainty over the effect of the US tariffs on the global economy. These days, seasoned money managers prefer to take every quarter as it comes to gauge the impact of delayed fresh investments and dampening CEO confidence. US tariffs are still three to five times higher than they were before Trump returned to power, amplifying the risks of stagflation-a combination of high inflation, stagnant economic growth, and elevated unemployment. And Trump's pause on tariffs is to end on July 9. The heightened risk perception is also driving a shift in global asset allocation. After years of being overlooked, fixed income is once again central to investor portfolios. Safety is taking precedence over aggressive growth. In India, this shift is playing out through a pivot toward hybrid products. Domestic fund managers are increasingly pushing multi-asset allocation funds and arbitrage-based hybrids over pure equity schemes. As the US grapples with its mounting debt burden, rising Treasury yields, and a weakening dollar, global investors are reassessing risk. Bonds are back in favour, and capital is shifting to safer terrain. Historically, a falling dollar has triggered flows into emerging markets like India and China-but this time, investors are revisiting familiar playbooks more cautiously. That said, short bursts of foreign inflows into markets like India remain possible, as we're seeing now. But in uncertain times as these, such flows shouldn't be mistaken for sticky capital. As always, hot money buys the dip and sells the rip.
Yahoo
23-05-2025
- Business
- Yahoo
A Recession Is ‘Likely,' According to Barclays — How To Prepare Now
Barclays, the global investment bank, recently predicted that a recession is likely on CNBC. Analysts from the brokerage believe the American economy will contract by 0.1% through the end of 2025 and they downgraded the global economic growth forecast for 2025 to 2.9%, down from 3.3% in 2024. Ajay Rajadhyaksha, global chairman of research for Barclay, noted that if trade tensions continue, there's a chance that developed economies will enter a recession. The potential economic slowdown was attributed to various factors, including uncertainty around tariffs, data around the labor market and future interest rate decisions. Trending Now: For You: While there are no guarantees that a recession will be announced in 2025, it's crucial that you do your best to organize your finances for the worst-case scenario. Below are ways you can prepare for a recession right now. Also here are the states most worried about a recession. Barclays suggested that investors exercise caution and underweight 'risk assets' in preparation for a possible recession. This doesn't mean withdrawing from the stock market, but changing your investing approach to protect your funds. You'll want to consider shifting your portfolio from volatile assets, like stocks or real estate, that could drop during an economic downturn, to safer assets. Barclays recommended a more defensive investment approach, with an overweight position in global fixed income and higher cash reserves, until further clarity on trade policies is achieved. Check Out: Cetin Duransoy, U.S. CEO of Raisin, said priorities are shifting fast as people are choosing security and control over growth with their funds right now. 'We're seeing more savers shift into fully insured options like high-yield savings accounts and CDs. Places where they don't have to choose between protecting their money and growing it,' he said. If you're nervous about the possibility of a recession, you'll want to change your investing approach. You want to be more practical about how you approach risk in 2025, since you never know what can happen next. You should be especially cautious if you have money invested that you'll need to access in the near future for a significant expense like a wedding or home down payment. Even though CDs and bonds aren't exciting, you don't want to worry about losing your money during turbulent times. 'Building up an emergency fund is crucial during times of uncertainty, so focus on saving up three to six months of living expenses in a separate account so it's out of sight and out of mind,' said Andrea Woroch, consumer and money-saving expert. Once you figure out how to be defensive with your stock portfolio, you'll want to make saving up for a rainy day your main priority to ensure that you have money to bail you out in the worst-case scenario. When the economy tips into a recession, there's no telling what can happen and you can't ignore the reality that you could lose your job. This is why you want to be prepared by having the funds to take care of your bills so that you don't have to rely on credit cards to get by. Setting and following a financial plan is essential during challenging economic times because you want to be certain that you have enough money to stay on top of your bills. 'It's more important than ever to track where every dollar goes in your budget to avoid wasteful spending,' Woroch said. She suggested using the zero-based budgeting method so that you can assign a job to every dollar you earn, so you know exactly where your money's going. The goal is to have some sort of financial plan so that you're not constantly nervous. Woroch suggested you spend time now reducing monthly bills so you have some extra breathing room in your budget in case of a possible recession. If you can reduce monthly bills right now, you'll be able to save more so that you can get adjusted to living leaner if a recession does happen. Here are the best ways to save on monthly fixed expenses: Start by cancelling services you no longer need because you either forgot about them or they don't offer much value. Review your data usage and change up your cell phone bill. Switch insurance policies. Negotiate rates with service providers to see if there are any promotional offers for loyalty. According to Austin Kilgore, consumer finance expert and analyst with Achieve, in the current economy, it may be wise to focus on the shorter term and determine where your vulnerabilities may be. For example, if you have an older vehicle, you should handle the maintenance now. If you have any medical or dental needs, you'll want to address them now if your current employer offers health insurance. When carrying credit card debt, you end up paying much more than the original purchase price of what you purchase. One of the best things that you can do to prepare for an economic downturn is to focus on paying down your credit card debt so that you have one less expense to stress about. You can pay down your lowest balance first for a quick win or focus on your highest interest rate if you want to take a mathematical approach. Kilgore said many people can take some time and effort to make a little extra right now and devote that to savings. If you have any concerns about possibly losing your job, then you'll also want to tap into additional income streams to build up your bank account and to have a back up plan. A few ways that you could increase your income now include: Pick up part-time work if there are opportunities available near you, especially in retail or the service industry. Try something in the gig economy, like dog walking or renting out your garage space. Tap into a freelancing marketplace like to see if you could use existing skills to generate income on a project basis. While it's challenging to predict what will happen in the economy, it's important that you plan ahead so that you're prepared for every possibility. More From GOBankingRates Here's the Minimum Salary Required To Be Considered Upper Class in 2025 These 10 Used Cars Will Last Longer Than an Average New Vehicle Sources CNBC, 'Barclays says a U.S. recession is increasingly likely, so underweight 'risk assets.'' Cetin Duransoy, Raisin Andrea Woroch Austin Kilgore, Achieve This article originally appeared on A Recession Is 'Likely,' According to Barclays — How To Prepare Now Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
22-05-2025
- Business
- Bloomberg
Japan Could Ask State-Owned Firms to Buy Bonds, Barclays Says
Japan may consider asking government-owned entities to support the nation's bond market if the selloff in longer-dated debt doesn't abate, according to Barclays Plc 's global chair of research. Firms with significant state influence like Japan Post Holdings Co. and the Government Pension Investment Fund could be 'quietly told' to buy more domestic bonds, Barclays' Ajay Rajadhyaksha said in an interview. While this isn't his base case and may not progress beyond a thought exercise, in theory such a scenario could trigger sales of US Treasuries in order to pay for domestic bonds.
Economic Times
21-05-2025
- Business
- Economic Times
India's recent market rally will need support from a stronger macroeconomic backdrop: Ajay Rajadhyaksha, Barclays
India's recent equity rally will need support from a stronger macroeconomic backdrop, said Ajay Rajadhyaksha, global chairman of research at Barclays. In an interview with Himadri Buch, New York-based Rajadhyaksha spoke about the US-China tariff conflict, US treasury, China and Gold, among other topics. Edited excerpts: ADVERTISEMENT How do you see the recent US-China tariff truce playing out? Is the worst over on the tariff front?By far, yes. While we are still going to end up with sizable tariffs on imports this year compared to the start of the year, it is important to look at where we were just five weeks ago. At that point, with tariffs at 145% on one side and 125% on the other, we were essentially facing a virtual embargo on trade between the two largest economies in the world. Had that continued for another 3-4 months, the consequences would have been severe. Even in the US, many jobs depend on products coming from China. Take the iPhone, for instance. A base iPhone sells for around $1,100. Of that, about $450 is the cost of manufacturing it in China. But the other $450 goes into research, design, development, marketing and advertising costs that are all tied to jobs in the US. So, when the supply chain is disrupted, the spillover effect is significant, especially for smaller businesses. What's important now is we are no longer staring at a wave of small business bankruptcies or facing empty shelves in US retail stores. If we weren't willing to go through that in May and June, there is no chance we were going to escalate further in mid-July, especially right before the holiday shopping season. So, most of the worst is behind us there is no question about it. Indian stocks had rallied as they were perceived to be less affected by tariffs. Now that the tariff tensions have eased, what does it mean for India? That may start to change now. For Indian equities to mount a new rally from here, it will depend on whether the macro improves. The macroeconomic environment in India over the last 6-9 months has not been terrible, but it is been more mediocre than it was 18 months ago. Back then, it seemed easy to argue that the country could grow at 8% for 20 straight years. That is no longer the case. As the world starts looking again at other Asian equity markets or even Europe, it starts to take away little bit from India. When you talk to global asset allocators, what do they say about India? From a global asset allocator's standpoint, India gets put in the same basket as the rest of them. So, if an investor sitting in London or New York has $100, 60-70% is going to be in the US, and the remaining 30% has to be allocated in Europe, Latin America or Asia. Indian bond market tends to be harder to invest in for the average bond investor sitting in the US. ADVERTISEMENT Having said that, the perception of Indian equities is pretty positive. This is a market that has historically been rewarding to customers for the last several years, which is not true in the case of the Chinese equity market. In terms of size, Asia is about 40% of the world's economies. But the financial markets are not developed enough. Capital controls still exist. Like, I cannot just put as much money as I want and take it out when I want. Given how well Indian large companies have done over the last 20 years, in relative terms, the financial markets still have a lot of catch-up to do. People sitting in Asia perhaps don't appreciate how little focus there is on an individual Asian market and that includes the Indian market for investors who sit in London and New York. ADVERTISEMENT What are the key risks that markets are not pricing in adequately? The one asset class that still behaving in a concerning fashion is the 30-year long bond, which remains close to 5%. Even though a recession has been avoided, it's almost certain that 2025 will be slower than 2024. If longer interest rates start to move to 5.5%, and the 10-year goes to 5%, it's because the US is just not willing to do what is required to get our debt in order. This may sound like a strong statement, but the US as a government is genuinely spending money like a drunken sailor on shore. We did it last year, the year before, are doing it now, plan to do it next year, and the risk is that, eventually, the bond market will say enough. ADVERTISEMENT What are your top picks at the moment? I would probably pick the big six in the US — the exception being, Tesla, which has now fallen by the wayside a little bit in investors' minds. They no longer talk about the big seven. Despite all this noise about trade, the single biggest economic force over the next 2-4 years is going to be AI and the speed with which that ripples through economies and the US probably still is in lead position. But at this point, the Chinese tech sector looks very attractive given the difference in valuations. They are making strides on AI and pushing AI almost as a government through the economy to the extent they can. They are making strides on robotics and infusing with AI. That is not reflected at all in valuation. Away from that, the dollar asset has near-term upside. I would not, even now, be a buyer of longer US bonds and worried about longer-plus interest rates. Is China a buy as of now? Yes, and the reason is partly because of valuations. Indian ETFs trade at a 20–21–22 multiple, while Chinese ETFs trade at a 9–10–11 multiple. But the other part of the reason is that I am genuinely excited about how quickly they are making strides across various technology fronts. Twenty five years ago, the cream of the US corporate sector included companies no one talks about now like General Electric, Intel, IBM. They still exist, but all of the Big Six tech names came up in just the last 20–25 years. There is an equivalent happening right now working beneath the surface, especially because we have less visibility into China's innovation hubs like Chengdu, Guangzhou, or Hangzhou. So yes, China is fine. ADVERTISEMENT What is your view on safe-haven gold now that markets have rebounded? Gold is going to struggle. We may see a short pull-back, but it has seen a massive rally in the last two and a half years, and it very much looks like it's topping out. In the near term or in the next few months, I suspect gold will struggle to go up. (You can now subscribe to our ETMarkets WhatsApp channel)
