‘Quick 10-15% correction would be healthy for the market’: Macquarie’s Sandeep Bhatia

Sandeep Bhatia, Managing Director and Head of Equity – India at Macquarie Capital, believes that the equity market may be due for a correction, and a sharp, short one would be better than a prolonged sideways move.“I would be in the camp of a time correction,” he said, but added, “a quick and sharp 10-15% correction is what is better from a market perspective.” While he doesn’t see the recent tariff news as a strong enough trigger, he said, “We’ll wait and see if there are more bad news coming out.”

Bhatia pointed out that a few macro triggers could shape the near-term outlook. A key one is interest rates. He expects a rate cut from the US Federal Reserve around the October-November holiday season and sees a growing possibility of a rate cut in India as well. “We could see another 25-basis point rate cut post Diwali,” he said, which could support consumption, especially for large-ticket items like automobiles.

Also Read | US tariff hike may cost India $6 billion a year, but Neelkanth Mishra sees room for a deal“Autos look interesting,” he said, calling them a “quasi-consumption story.” He expects the October-December quarter to benefit from festive demand. “High-ticket consumption like autos and travel could see impetus come the fourth quarter, and hotels, therefore, would be a big beneficiary.”

In the pharma sector, Bhatia flagged uncertainties related to US pricing pressures. Referring to Sun Pharma, he noted that the company, which gets about 20% of its revenue from innovative drugs in the US, had not received any notice from regulators yet. However, he cautioned, “With the Trump administration, everything is a work in progress… things can move suddenly in the other direction.”

He referred to the risk of US pricing policies linking domestic prices to those charged in other developed countries. “There’s potentially a pricing pressure that can emerge for the US supplies,” he said. But he added that industry lobbying could play a role: “Everything can be lobbied in this administration.”Also Read | India, Mexico, Korea may gain from global trade reset: Oppenheimer strategist

On FMCG, Bhatia said it’s too early to call the sector a safe haven. “We need at least 12 months of strong volume growth,” he said, estimating that volume growth would need to be in line with gross domestic product (GDP) at about 6-7%. He noted that while the market strength has largely been driven by re-rating and P/E multiple expansion, earnings have not kept pace.

“Fundamentally, stock prices should track earnings,” he said. “Would I mind a correction of 10%? I don’t mind that – a correction is welcome.”

For the full interview, watch the accompanying video

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