Good earnings growth are expected in FY18: Sanjay Dongre, UTI AMC

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“The CASA for the banks may be going up in the next three to four months while there could be some issues which banks could face on the asset side of their balance sheet.” 
The banking sector does not look good in the near term therefore it would have its impact on even the fee income that the banks are able to generate because every other resource is geared towards managing the demonetisation process. Most of banks would be registering a good amount of treasury gain. So on one hand we are expected to have a good amount– liability side of the balance sheet. The CASA for the banks may be going up in the next three to four months while there could be some issues which banks could face on the asset side of their balance sheet.
Keeping RBI monetary policy in mind, US in the last few years have been maintaining a very benign monetary policy but with the Trump administration taking over next month in US, what we are going to see is loose fiscal policy and a tighter monetary policy. Its impact on the dollar would be that it would strengthen against most of the currencies and a stronger dollar is never good for the emerging markets in sense of fund flow and therefore that is going to impact our markets and it will impart good amount of volatility in our markets.

 

Talking about asset allocation, Mr. Dongre shares the same view that equity as an asset class should be able to deliver a good amount of returns over the next one or two years because once the remonetisation of the economy happens, growth should come back and in FY18 we should be able to see good amount of earnings growth which has been elusive in the last three, four years and that is what is going to drive the market. Going forward therefore as a equity class obviously the things are looking much better even from the valuation perspective.

 

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