Standoff Ukraine-Russia which increasingly triggers the increase in energy prices and encourages global crude prices to exponential highs which will eventually translate to slower global growth, said Dhananjay Sinha, Director of Executing and Chair of the Strategy for the Securities Financial Institution JM.
Crude oil prices will kiss $ 100 per barrel amid fears of supply, because the west slaps sanctions on Russia, the third largest oil producer in the world.
On the financial front, Sinha shares with moneycontrol which remembers the potential depreciation of 7-10 percent in INR / USD on a real exchange rate base, and the expected increase in the differentiance of Indian-US short-term levels to more than 540bp, US Rupee, India Rupee Can weaken to 80 dollars and the 10-year G result might harden to 7.75-7.50 percent. The 10-year rate of bond results is 6.75 percent on Tuesday.
Quotes from interviews:
Do you think Ukrainian-Russian tension will keep the market nervous in the short term?
The impact of Russian-Ukraine Favagration is underway and is a support point of the wider conflict between the US and Europe on the one hand and Russia on the other. From a Russian point of view, he also turned towards China’s participation. Therefore, while on the one hand, it has implications for increasing energy prices, including global crude oil prices, on the other hand, can be translated into slower global growth.
Therefore, it will be early to say that the problem has been fully appreciated. However, news about Russian troops who trace marginally is a positive incremental development.
What is the theme of a great investment that someone must consider in the market fall now?
We continue to focus on large companies in the field of urban consumption spaces that include Autos, QSR (fast service restaurant), durability and other discretioner. The IT sector can perform well after a recent correction. Private banks can start carrying out after last year’s performance performance. After the increase in crude oil prices, upstream oil companies can also do it well.
Do you think the increase in interest rates expected by The Fed has started a discount by the global market?
We don’t really think so. The rate of increase, balance contraction from the US, has not yet begun and therefore will be in a hurry to say that the results and implications are valued.
Can the results of US bond across a psychological sign of 3 percent in the short term?
We think the 10-year results can rise to 2.5 percent upwards, especially after the US started the balance sheet depreciation.
Do you think the current market volatility and correction can affect LIC IPO?
We don’t see too much implications from a wider market point of view. But, over time, it can erode the close of other stock markets in the financial service room.
Do you think the RBI can start raising the main policy level towards the end of 2022?
In the midst of the re-emergence of CAD (the current account deficit), the expected decline in net capital inflows becomes 1-1.5 percent of GDP, slowing growth, higher core inflation, and the negative gap between the estimated and actual forex reserves ( $ 660 billion versus $ 630 billion and October 2021 peak of $ 642 billion), the ability of the RBI to prevent depreciation of INR / USD and still managing low rates, accommodative financial conditions and inflation targets will be very complicated.
Given the potential depreciation of 7-10 percent in INR / USD on the basis of identifiers, and the expected increase in the differentiance of Indian-US short-term level to more than 540bp, we anticipate INR / USD to weaken to 80 and 10 years. Seconds to harden further to 7.75-7.50 percent. RBI is expected to increase the reverse repo level of 100-110bp from Q2 2022 in response to sustainable increase in core inflation, currency depreciation and rising US interest rates.
Inflation risk can come from crude oil prices rising above $ 100 per barrel and the resurrection of commodity prices, which will encourage a strong Fed response.