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Top US hedge fund says Indian market looks difficult for 2020

Indian equity market is looking very difficult amid sky high price-to-earnings (P/E) ratio, says Teresa Barger, Chief Executive Officer of Washington-based hedge fund Cartica Management.

Equity benchmarks Sensex and Nifty currently hover at fresh record high levels. The 30-share Sensex traded at a P/E of 29.10 against its five-year average of 22.70. Likewise, Nifty P/E hovered around the 28.40 mark against its long-term average of 24.60.

“The Indian market is in a difficult situation. It is very hard to buy new stocks as there is no EPS growth,” Barger said, adding that she loves Indian market from a long-term perspective due to formalisation and millennialisation of the economy. But, she expects the market to be in a cyclical downturn in 2020.

Cartica Capital holds around 3.23 per cent stake in Tata Motors, 1.90 per cent in Page Industries and 1.62 per cent in Info Edge. It also has over 1 per cent stake in RBL Bank.

In an interaction with ETNOW, Barger said she sees higher inflow to Indian market next year. She also projected crude oil prices to remain steady going forward, which should be a positive for India.

In international market, crude oil prices advanced nearly 33 per cent to $60.82 per barrel on December 19 from $45.89 on January 1 this year.

Barger said she expects benign global growth in 2020 and believes the ongoing rally in the US market, which is also hovering at record high levels, does not seem sustainable in the long run.

“We feel the strength in the US market will be unsustainable. It is largely driven by share buybacks. We also expect the US dollar to stay at the same level or weaken in 2020” she said.

The dollar index remained almost stable in 2019. It was at 96.96 on December 18 against 96.42 on January 2.

Source: Economic Times