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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.
Economic Times
12-05-2025
- Business
- Economic Times
Conflict impact on markets limited but India lacks stronger drivers: Christy Tan, Franklin Templeton
For the Indian equity markets to go from strength to strength, there have to be stronger drivers. And that could be something that is missing. And if you accompany that with rich valuations, then that could set the stage for the upside prospects to be quite limited. So, there's a need to be really selective, increasingly so now than previously. That is the formula to get more returns out of Indian assets. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The impact of the India-Pakistan conflict on the markets will be limited, said Christy Tan , MD and Investment Strategist-APAC, Franklin Templeton Institute. In an interview with Nishanth Vasudevan, Singapore-based Tan spoke about her views on India, China and investing in equities among other topics. Edited Excerpts:Given current assessments, we think the impact on Indian assets will be limited, as a full-blown war remains unlikely. The US, EU, UN, China, and Russia have responded, and most have actively facilitated dialogues and de-escalation the Indian equity markets to go from strength to strength, there have to be stronger drivers. And that could be something that is missing. And if you accompany that with rich valuations, then that could set the stage for the upside prospects to be quite limited. So, there's a need to be really selective, increasingly so now than previously. That is the formula to get more returns out of Indian market is probably shifting from that sentiment-driven tone to a more fundamentally driven one after Donald Trump's more conciliatory stance towards tariffs and deals. So, we might still, along the way, be experiencing some volatility because markets are still very sensitive and very reactive to what Trump says. And there is no prediction as to what he would say that could put markets in a tailspin at the end of the day, we are looking at a reduced level of uncertainty because we are moving nearer towards potentially the announcement of some trade deals with some countries. Markets could potentially switch to more base case is still that the US would be able to avoid or escape a recession, given that it is, after all, a more services-driven economy. There's not a large amount of pressure in the financial sector or in the real economy sectors. But we will see default rates start to increase. We'll see delinquencies start to increase. And this is coming up from a very low point-well below the 25-year average. So, is that sufficient to push the economy into a recession? Perhaps have been prioritising diversification because the geopolitical situation hasn't abated. You still need to build a more resilient portfolio. If you think that equities are too risky, a good substitute could be high-yield credit. Over the years, ever since the pandemic, the quality of this high-yield credit has improved. And the companies that were able to withstand the high cost of financing from the Fed's rate hikes continue to be able to weather all this, and spreads have tightened so much. Even though they've widened recently, they're still also within manageable levels. A lot of people think gold and crypto probably are safe havens. That is arguable. It should be thoughtful diversification and looking at risk-reward in a manner where you really comb through the whole fixed income spectrum. It's not just about the 60-40 portfolio within the two main assets (equity and debt).There are some signals that we follow that have shown the stock market tends to bottom up and return like 14-15% a year later. So, don't wait for volatility to come off. If you wait until volatility comes off- like if VIX goes from 40 to 20-you would have missed that front part of the rally, because markets tend to bottom before that. And, don't wait until the recession gets announced, because finally, when the recession gets announced, that is when the markets start to go the short term, the US has lost its exceptionalism. However, we will probably not yet see a huge, significant reversal of flows from the US. I think a large part of that rotation is within the US, from perhaps equities to fixed income. In the past, you could have the stock market falling, but the dollar increased. Now the risk is a trifecta of falling stocks, rising bond yields, and a falling dollar. So that trifecta of risk will be quite instrumental in getting investors basically to reassess their portfolios and really shift out of the US But that need not be the emerging market. That could be in Europe. It looks attractive. Investors have been super confused about in China could look cheap, but it could be cheaper. The only thing about valuation is whether there is something to look forward to. It's either fiscal and monetary policies or the right combination. Markets will have to tame their expectations of what Chinese policymakers will do, because Chinese policymakers will not do a bazooka. There are good reasons for that.
Time of India
12-05-2025
- Business
- Time of India
Conflict impact on markets limited but India lacks stronger drivers: Christy Tan, Franklin Templeton
The impact of the India-Pakistan conflict on the markets will be limited, said Christy Tan , MD and Investment Strategist-APAC, Franklin Templeton Institute. In an interview with Nishanth Vasudevan, Singapore-based Tan spoke about her views on India, China and investing in equities among other topics. Edited Excerpts: What is your assessment of the impact of the India-Pakistan conflict on Indian markets ? Given current assessments, we think the impact on Indian assets will be limited, as a full-blown war remains unlikely. The US, EU, UN, China, and Russia have responded, and most have actively facilitated dialogues and de-escalation efforts. Beyond the tensions, how are you evaluating India as an investment destination? For the Indian equity markets to go from strength to strength, there have to be stronger drivers. And that could be something that is missing. And if you accompany that with rich valuations, then that could set the stage for the upside prospects to be quite limited. So, there's a need to be really selective, increasingly so now than previously. That is the formula to get more returns out of Indian assets. Globally, the optimism in the markets seems to be back. Is it some that's here to stay, or is it just the calm before the storm? The market is probably shifting from that sentiment-driven tone to a more fundamentally driven one after Donald Trump's more conciliatory stance towards tariffs and deals. So, we might still, along the way, be experiencing some volatility because markets are still very sensitive and very reactive to what Trump says. And there is no prediction as to what he would say that could put markets in a tailspin anyway. But, at the end of the day, we are looking at a reduced level of uncertainty because we are moving nearer towards potentially the announcement of some trade deals with some countries. Markets could potentially switch to more fundamentals. Did you see a recession in the US? The base case is still that the US would be able to avoid or escape a recession, given that it is, after all, a more services-driven economy. There's not a large amount of pressure in the financial sector or in the real economy sectors. But we will see default rates start to increase. We'll see delinquencies start to increase. And this is coming up from a very low point-well below the 25-year average. So, is that sufficient to push the economy into a recession? Perhaps not. The one question that everyone has is how and where to invest when there's so much policy uncertainty? We have been prioritising diversification because the geopolitical situation hasn't abated. You still need to build a more resilient portfolio. If you think that equities are too risky, a good substitute could be high-yield credit. Over the years, ever since the pandemic, the quality of this high-yield credit has improved. And the companies that were able to withstand the high cost of financing from the Fed's rate hikes continue to be able to weather all this, and spreads have tightened so much. Even though they've widened recently, they're still also within manageable levels. A lot of people think gold and crypto probably are safe havens. That is arguable. It should be thoughtful diversification and looking at risk-reward in a manner where you really comb through the whole fixed income spectrum. It's not just about the 60-40 portfolio within the two main assets (equity and debt). What about equities? There are some signals that we follow that have shown the stock market tends to bottom up and return like 14-15% a year later. So, don't wait for volatility to come off. If you wait until volatility comes off- like if VIX goes from 40 to 20-you would have missed that front part of the rally, because markets tend to bottom before that. And, don't wait until the recession gets announced, because finally, when the recession gets announced, that is when the markets start to go up. Do you see some kind of rotation of long-term capital from the US to emerging markets? In the short term, the US has lost its exceptionalism. However, we will probably not yet see a huge, significant reversal of flows from the US. I think a large part of that rotation is within the US, from perhaps equities to fixed income. In the past, you could have the stock market falling, but the dollar increased. Now the risk is a trifecta of falling stocks, rising bond yields, and a falling dollar. So that trifecta of risk will be quite instrumental in getting investors basically to reassess their portfolios and really shift out of the US But that need not be the emerging market. That could be in Europe. It looks attractive. Investors have been super confused about China. What is your take? Valuation in China could look cheap, but it could be cheaper. The only thing about valuation is whether there is something to look forward to. It's either fiscal and monetary policies or the right combination. Markets will have to tame their expectations of what Chinese policymakers will do, because Chinese policymakers will not do a bazooka. There are good reasons for that.
Ammon
03-05-2025
- Business
- Ammon
Trump's next 100 days: Now comes the hard part
Ammon News - President Donald Trump spent his first 100 days issuing a blitz of executive orders to deliver rapidly on campaign pledges, drastically downsize the government and reshape America's role on the global the job gets trickier now for the self-styled dealmaker-in-chief, who must corral fractious Republicans on Capitol Hill to anchor his domestic policies in legislation that can cement a lasting legacy."Trump's first 100 days were remarkable for their pace and impact. Now comes the hard part," Stephen Dover, chief market strategist and head of the Franklin Templeton Institute, said in a memo to investors."The next 100 days will shift the focus to the challenges of passing legislation while simultaneously addressing deficit reduction. Congress must act, which requires building legislative coalitions."In a dizzying first three months, Trump wielded executive power like no other modern president, signing more than 140 orders on immigration, culture war issues and slashing the federal the unilateral authority of the Oval Office has its limits and much of the reform Trump wants to enact particularly anything involving spending public money requires laws to be passed by political capital will be put to the test as he aims to shepherd his sprawling agenda on tax, border security and energy production through the House and Trump's task is his receding popularity, with the polls flashing warning signs amid economic uncertainty and misgivings over his handling of immigration and international orders signed without the involvement of Congress can be undone by any are also vulnerable to legal and constitutional challenges, as Trump has discovered in dozens of rulings that blocked his policies early in his presidency.A more lasting impact, say analysts, will require the kind of political brinkmanship and consensus-building that haven't been necessary so author of "The Art of the Deal" doesn't have a great record of getting contentious legislation through his divided his 2017-21 term, he passed the Abraham Accords, fostering peace between Israel and several of its neighbors, and celebrated a trade deal with Canada that has since been obliterated by his he failed to repeal the Affordable Care Act, or Obamacare a key priority and, despite much fanfare over summits in Singapore and Hanoi, was unable to ink any kind of deal with North Korea's Kim Jong it comes to uniting around a common cause, his lawmakers in Congress haven't fared much better, getting just five bills into law in Trump's first 100 days, the lowest number in set a deadline of July 4 to pass the president's agenda led by an extension of his 2017 tax cuts and fulfilling a campaign pledge to eliminate levies on tips, overtime and Social Security payments.'A lot trickier'The slim Republican majorities in both chambers will require almost perfect conservatives won't back the tax cuts which have an estimated price tag of around $5 trillion over 10 years without deep reductions in with tough reelection fights in next year's midterms say they won't support the likely evisceration of the Medicaid health insurance program for low-income families that this would consultant and former Senate aide Andrew Koneschusky, a key player in negotiations over the 2017 tax cuts, expects Trump's next 100 days to be "a lot trickier.""When it comes to tax bills, the ultimate adult in the room is math. You can't break the laws of mathematics, no matter how much politicians might want to," he told AFP."It's going to be extremely tricky for the numbers to add up in a way that satisfies everyone in the Republican caucus."Meanwhile Trump is up against the battle for the House majority in 2026 will likely come down to a few swing districts and the president could easily see his ability to shepherd legislation through Congress is relying on an arcane Senate procedure called "reconciliation" that means, given certain conditions are satisfied, he won't need Democratic support to pass his priorities which is just as Minority Leader Hakeem Jeffries has called Trump's agenda "unconscionable" and "un-American," vowing to do everything Democrats can to "bury it in the ground, never to rise again." AFP
