Market rally not supported completely by fundamentals; GST to be a disruptor: UR Bhat

Dalton Capital’s director believes that small business could be hit by GST, which would hurt supplies to bigger firms.

On a day when the market hit record high points, experts like Andrew Holland and UR Bhat have been sounding caution on the market.

Bhat, Director at Dalton Capital Advisors said that the current rally is not supported by fundamentals. Currently, liquidty was boosting the market, but in the long term, fundamentals and earnings will have to improve to justify the high valuations, he added.

In fact, going forward, there could be disruptions — both domestic and global — that could have an impact on the economy and markets.

Bhat highlighted that small businesses would be hit on the back of goods and services tax (GST) roll out. “There would be disruption in terms of supply to big businesses…this could impact GDP for a few quarters,” he told CNBC-TV18. Internationally too, situation in North Korea, policies from US President Donald Trump, steep rate hike by the US Fed could have a negative impact.

Speaking on FMCG sector and its rally on the indices, Bhat said that companies need to show better earnings growth. “The market feels that the growth numbers should be much dramatic,” he added.


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