Michael Metz, chief investment strategist, Oppenheimer and Company, does not expect US Fed to increase rates again. Metz feels that the margins of US companies may have peaked out. According to him, the enthusiasm in equities is overdone and he expects a correction now. Metz is positive on India in the long-term, but cautious in the near-term. He feels that the Indian valuations are stretched for the near-term. He further adds that they are reducing exposure to emerging markets for now. CNBC-TV18 shares with domain-b its interview with Metz:

How have you read the pullback in the US markets and what do you expect the Fed to do in their next meeting now? I think the Fed will not raise rates again. Actually if one thinks about it, the only impact that the Fed will have by raising rates is to help the housing industry. Meanwhile, with oil coming down a bit, the pressure is easing.

Is that what is rallying the markets and if the Fed should go ahead and actually raise interest rates, will that lead to a sharp correction? I think a push in rates will only be a surprise and it will lead to a sharp correction. But frankly, I think the enthusiasm has been over done in any case.

The real question is what is going to happen to corporate profit margins, they are at an all time high and Wall Street is expecting another double-digit gain in earnings this year or next year. If one looks at a rise in the labour cost, which was coming in as a surprise, I think margins are at their peak now. So all the estimates are way too high and must come down.

As we move into this neutral zone in terms of interest rates, what sort of an impact do you expect to see on liquidity that is coming into emerging markets at this point? I think the trauma of summer is over and people are willing to take more volatile commitments. So I think it is good news for the emerging markets. We will have more money flows from US into the emerging markets over the next few months.

You are not in the camp that believes that with the slowdown in the US economy, money usually flows back to the mother country? I think people are over estimating how important the American economy is to the rest of the world. I think with everyday that passes, the emerging and developing nations are less dependent on the American consumers. So I think we are in an environment, which is strong enough, where growth overseas would accelerate and it will decelerate the US. I think this will cause money to flow into the more vibrant economies.

Where would you rate India among that because India is perhaps one of the large economies that is least dependent on the growth in US? That is right and I think India has some very positive things. The spending on infrastructure, rise in capital spending and manufacturing is very bullish for India in the long-term. But the problem really is that valuations are too stretched. So in the long-term, India looks great, but for the near-term frankly, I am a bit cautious.

Have you had a chance to look at the fiscal situation in India? Does that worry you if you have looked at it? It worries me but frankly, living in America I am more worried about the fiscal situation here. Considering the situation, we have no right to criticise anybody else.

Tactically as a fund, what is the call on India now? Have you increased your cash weightage? Actually, right now I am reducing my exposure to emerging markets generally, because on a short-term basis I think they have run too fast.