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Expect govt spending and freebies to go up substantially: Ajay Srivastava, Dimensions Consulting

Like it or not, the Indian economy desperately needs some fi..

Like it or not, the Indian economy desperately needs some fiscal stimulus, no matter what, asserts Ajay Srivastava, CEO, Dimensions Consulting. He spoke to ETNow.

Edited excerpts:

ET Now: I am giving you four options. You can choose, you can be a political commentator today, you can be a macro commentator, you can talk about technicals and you can comment on global markets but unfortunately I know your answer it will be all bad.
Ajay Srivastava: No, not really. The NPS decision increasing the contribution from 10 per cent to 14 per cent is already betraying what is going to follow us in the immediate future. I think what is going to follow is a huge amount of spending. A huge amount of relaxation from the RBI is already on the cards.

So, some would say it is a negative. I would say it is a reasonable positive because at this point of time fiscal stimulus is on the way. The government has read the writing on the wall, it is going to move to protect its turf, it is going to move to fight for elections and therefore, you will see a substantial spending and freebies coming your way.

Some may like it, some may not, some may say it is a negative. I would say the economy desperately needs a fiscal stimulus, it may have long term repercussions, but so be it. On the other hand, IT will make a comeback. So to that extent, portfolio-wise, you need to focus yourself, forget all the pictures which are coming through. I think for an ordinary investor like us, we need to focus on how to protect our portfolio and where to put our money and what to do. We thought it was jingle bells, but it turned out to be alarm bells.

ETNow: We have seen how the markets have reacted to the exit poll outcome. Do you sense if the actual outcome is pretty much similar to what the exit poll indicated at least for Chhattisgarh and Rajasthan? Has the market already digested that?
Ajay Srivastava: Of course, it has. I do not think — we are of the opinion that it is more today GDP, more economy driving investors and ourselves than the political outcomes. I think economy is the problem today, the demand is a problem today. We see a bigger problem coming in the quarterly results. Therefore, there is kind of an incentive to buy into this fall in the market because you are not seeing anything changing dramatically.

Crude fell. Interest rates and the rupee went back, but you never saw anybody buying into this market. At this point, in an over invested domestic market, it is certainly not buying season. Overseas investors we talk to have already switched off for the year to the extent and switched off for India for some time to come. So, there is no buying.

What is good is selling is finished. The only positive today and you would be surprised to note that I am saying something positive. The market setup is actually very good, sellers are out, weak hands are out, people are low on positions in terms of futures.

It is not a bad place for the market, a little bit of positive can take this market up, not very much but can hold the line at least if not fall down. So my view is, you will see the bottom in the morning and gradually, the market should recover today and stabilise a little bit more than what we are apprehending.

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