Mkts to face serious headwinds ahead: Bear Stearns

Michael Kurtz of Bear Stearns lists out his concerns for India. According to Kurtz, the RBI is aggressively fighting inflation, credit and liquidity problem. He expects RBI to continue to bring rates up, which will work to the detriment of topline companies as well as liquidity for the Indian equities market.

He further adds, "The extreme problem, in terms of mismatch between high valuations and an earnings and return on equities story, which may normalise over the next year or two mainly because Indian companies have started to add capacity."

Kurtz also feels that India will be vulnerable to US growth concerns. "The next emerging market shock is going to be lead by US inflation scare as opposed to the shock in February that was led by US growth concerns. India will be particularly vulnerable to this kind of shock because its balance of payments is so precariously dependent on portfolio capital inflows to prop us the currency."

Speaking on the direction for Asian markets going forward, Michael Kurtz of Bear Stearns says that markets are in for some serious headwinds in the months ahead.

"We are likely to see the Fed start hiking rates in the months ahead, pulling with it the Hong Kong Bank, Bank of Japan and China's central bank, also in the process of tightening policy as well. Combine this with seasonality, the markets are in for some fairly serious headwinds in the months ahead," cautions Kurtz.