Q: Do you think the policy-makers in a move to catch up with reality and surging inflation may overdo things and cause much more damage to the economy and markets than what’s needed?
Ans:
>Policy action will be in two parts. Part 1 - liquidity management, inflation and demand control; Part 2 - support growth
>Hope and pray regulators know when to take the step off the pedal
Q: So in other words, can the sell-off we have seen across equity markets will be in two phases? Or will the second phase see a relief rally that the first phase has ended?
And:
>Equity markets react in anticipation; they’re reacting to the first part of the movie now
>Pricing in tightening liquidity, rising rates, slowing growth, demand-related issues, recession
>Markets will react to the possibility of rising liquidity, falling interest rates and pro-growth measures
Q: On a scale of 1 - 10, 1 being the biggest spot of bother, how would you rate the Indian economy: 6 months ago and now? Do you think the next six months will be even more painful for the Indian economy and markets?
Ans:
>We’re looking at an oasis in the desert
>Our (Indian economy’s) rahu kaalam has started; rise in oil prices will hurt growth
>Growth will be taking a hit right now because of triple-digit oil prices, higher inflation and FPI outflows
>Six months from now we can be in a better situation if we have a scenario where Russia-Ukraine dispute is settled, oil prices are in double-digit, central banks globally have controlled inflation
>If situation continues to deteriorate six months from now, we could be in a more serious situation than what we are in today
Q: There was a time when diversification into other geographies and markets was being advocated to investors to catch the rising stars globally. Yet, Kotak’s Global Innovation Fund has seen dismal return over the past one year. What went wrong here?
Ans:
>Tied up with Wellington Asset Management for this fund
>Fund faced turbulent times that no one had anticipated
>After launch of the fund, China cracked down on tech stocks, US inflation and interest rates went up
>Investors should treat Kotak’s Global Innovation Fund as a high risk, high return offering
>Those who have an appetite for risk can average (this fund) at the current levels
 "What is Nilesh Shah's take on investors' approach to markets?")
