'India's fundamental recovery seems strong, which could help reduce the volatility'

Lately, the markets have been volatile as there are concerns, particularly on the global front with rising inflation, excesses of loose monetary policies, the face-off with OPEC, etc. How do you view these factors in the context of their influence on the Indian markets? What worries you the most at the moment? IN CY2021, Indian markets gave a return of about 22 per cent (Source: Bloomberg)*. It was among the top-performing markets globally, better than both developed and emerging markets. There is no doubt that India was one of the top-performing economies. The recovery post-pandemic surprised all naysayers. I also believe global liquidity and easy monetary policy by Central bankers played a role in equities as an asset class doing well. While the economic recovery in India continues to gain traction despite the third wave, there are some worrying factors on the economic horizon. Excess liquidity and doles in developed markets seem to have led to unbridled inflation. Most Central bankers are treating this as transitory due to elevated commodity prices and are continuing with their loose monetary policies. We need to see the inflation cool in the near future if that be the case. Hence, this would mean that as and when the rates are revised, both globally and domestically, they may be a lot more and faster than what the market participants anticipate. Historically taper tantrum impacts emerging markets like India till the tapering commences. Post that, markets are driven by fundamental factors. We hope this time also it is the same. We expect Fed to commence the rate hike cycle soon. India's fundamental recovery seems strong, which could help reduce the volatility. Dynamically altering the asset allocation in response to the state of the markets is a compelling proposition on paper but perhaps difficult to execute accurately on a sustainable basis. How much of it will be driven by a quant model versus the fund manager's judgment in the case of your dynamic equity fund? Can you shed some light on the workings of the proprietary model you follow for managing this fund? Market participants are often driven by greed and fear, which tends to colour their investment d