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India an oasis in global desert; large-caps to bridge gap with small-caps in 2024: Nilesh Shah
Nilesh Shah of Kotak AMC also credited the US central bank for maintaining the balance between inflation and growth. Nilesh Shah, MD and CEO of Kotak Mutual Fund, shared an interesting analogy with Moneycontrol regarding the Federal Reserve's recent announcements. Drawing from the movie "Drunken Master" that he watched as a child, Shah compared the Fed to the "drunken master." In the movie, Jackie Chan's guru, despite being a drunkard, teaches him Kung Fu. In the final battle, Jackie Chan uses the "drunk" version of Kung Fu to conquer the enemy. "I think the Fed is the drunken master. It's behaving in an unpredictable manner to ensure that markets remain confused and they are able to achieve their balancing," he said. Addressing the media, he discussed various issues including Fed rates, Foreign Institutional Investors (FIIs), and India's unique position going into 2024. Here are some of the key highlights. On the December 15 Fed Decision The Fed has been trying to balance between growth and inflation by raising interest rates without taking out liquidity. The Fed's dilemma, Shah said, is that the debt burden is huge, but they need to keep interest rates higher in order to control inflation. "We just have to hope and pray that the Fed will maintain delicate balancing going forward like they have done in the last one and a half year." Fed, he explains, has been fairly unpredictable and they changed their stance from "transient inflation" to "higher for longer rates" to now "no longer higher". This has been a part of their attempts to maintain a delicate balance. "Unfortunately, deficit (US’s fiscal deficit) is higher than the revenue (federal revenue). Fed has to ensure that interest rates remain in the manner where this massive debt burden can be managed," he explains. Benefit for Emerging Markets Shah sees the events unfolding in the US as beneficial for emerging markets. As the US Treasury rates decrease, there is potential for increased flows to emerging markets, including India. He had previously emphasised that India has provided good returns compared to other emerging markets, positioning it as a significant beneficiary of these inflows. Advantage India Shah describes India as an oasis in the global desert, moving from being the fifth largest economy to become the third largest economy. "We are truly in 'amrit kaal' with a combination of Triveni Sangam of talent, capital and infrastructure." Source - Money Control
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