By Saurav Mukherjee
Mumbai (Maharashtra) [India], September 2 (ANI): Elevated global bond yields and persistent crude oil price risks are bringing imported inflationary pressures to India, Dhiraj Relli, MD and CEO of HDFC Securities, told ANI News in an exclusive interview in Mumbai on Wednesday.
Commenting on the macroeconomic backdrop, Relli noted that while underlying macroeconomic growth remains strong with a 7.8 per cent GDP print, higher global bond yields and elevated commodity prices could compress corporate profitability, if sustained over coming quarters.
When asked to comment on market microstructure changes, Relli defended SEBI's Closing Auction Session (CAS) introduced to curb end-of-day Volume-Weighted Average Price (VWAP) manipulation.
"The call auction mechanism is a global best practice brought in to align price discovery with international standards," he said, adding that domestic mutual funds have increased their volume share from under 5 per cent to nearly 25 per cent.
Sharing his inputs on brokerage adaptation to regulatory cooling in derivatives, he stated, "Focus has shifted heavily toward the cash market through Margin Trading Facility (MTF) and Securities Lending and Borrowing (SLB)."
Relli also spoke on currency defence and central bank action and described the RBI's easing of FCNR(B) deposit norms as a tactical measure to cushion forex reserves and arrest Rupee depreciation.
"While this provides temporary comfort to forex reserves and stabilises the Rupee in the short term, it is not a structural solution. Long-term currency stability requires broader macroeconomic and central bank policy actions," he said.
He added that if CPI inflation stays near or above the 6 per cent upper limit, RBI could test its long pause and shift stance to one or two rate hikes over the next 12 to 18 months.
Evaluating sector impacts, Relli highlighted that FCNR-led liquidity keeps banks flush with funds, temporarily impacting margins before lower funding costs take effect.
Meanwhile, proposed US H-1B visa fee hikes pose a 100 to 150 basis point margin drag on Indian IT firms, though navigating Generative AI disruption remains their primary strategic priority, he mentioned.
Discussing foreign portfolio flows, Relli observed that FPIs face attractive global alternatives, elevated US Treasury yields, and Rupee depreciation.
"To bring FIIs back, we need valuation comfort and decisive visibility of double-digit or high-teens earnings growth over the next few quarters," he stressed.
Expressing his views on valuations, Relli discounted a sharp market-wide crash, pointing to two years of ongoing corrections. He advised a bottom-up approach, favouring mid-caps backed by strong earnings alongside specific sectors: BFSI (especially Public Sector Banks), discretionary consumption, pharma, capital markets, and AMCs.
Relli, while outlining strategy, advocated for a multi-asset allocation incorporating equity, gold, silver, debt, REITs, and InvITs, deployed via a 12-to-24-month staggered approach.
"Investors should target a realistic, risk-adjusted 12% to 15% CAGR over a 3-to-5-year horizon," he concluded. (ANI)
Rising global bond yields, FCNR-B inflows and SEBI's CAS to shape market dynamics: HDFC Securities CEO Dhiraj Relli
