Indian markets are un-correlated to what is happening in China or what is happening in a lot of EM baskets. Atul Suri, CEO & Chief Investment Officer, Marathon Trends PMS, tells ET Now.
Edited excerpts:
The Chinese market is near their 52-week low and we are seeing this trade war probably impacting them much more than any other country at this point of time. The dollar index is strengthening. Your view on what is happening in the Chinese market and dollar index and if you can touch on Japanese yen as well.
The Chinese market has always been a very deviant market. It never really seems to be part of the global cycle, it has a mind of its own. I do not think it is going to have a massive knockdown effect on global markets.
When you see the US charts and you see them suffering or if there is a risk you know that you can extrapolate the theory. But the Chinese market charts, which are honestly horrendous, are not going to put a very big pressure on global markets. It may affect the MSCI Emerging Market Index and that is another chart which is not really looking very pretty.
About India, to some extent I am getting more and more convinced that it is not so correlated with the whole EM basket and the kind of chart patterns that we have, the kind of leadership that we have, the way we are behaving, show we are a very standout market. I am a medium to long term bull. I am very bullish on this market and that this actually reinforces my belief.
As for the dollar index, that is a red flag for me because the dollar DXY beyond 95.5 or thereabouts can be a little bit of a worry and that will create short-term pressures, pulls and pains, especially in the EM currencies, bonds and also the equities.
With the US bond yields around 3%, let the breakouts happen or let there be triggers for us to be really worried about. But at the moment, I think I am focussed on the character, behaviour and nature of Indian markets because they are showing that they are pretty un-correlated to what is happening in China or what is happening in a lot of EM baskets.
In terms of price trends, that is very positive. In India, there has been a big Nifty rally and a lot of people are talking about midcap, smallcaps but I have addressed it earlier. You will also see a big catch-up trade happening. Not everything will go up like it was maybe a year ago but qualitatively wherever there is going to be good performance and things like that, the markets will pull up. The fall was more technical in nature, with a lot of margining systems etc. But as they are easing out, stocks are bouncing back but you need to be selective in those spaces. All in all, I still continue to be very bullish on India in the medium to long term and in the short-term, I was surprised by what has happened.
Two months ago, nobody would have ever told you it is going to touch a lifetime high. The fact is the market is powering towards 12000 on the Nifty before the end of the year. It is a standout market, and some sectors are clearly showing you that these are the makings of a big trend. It is a great opportunity. You just have to be optimistic and not get depressed with all the news around. It is one of the best places to be in the world right now as far as global equities go.
Crude Could Be In For a Sharp Slide
A lot is also dependent both on a macro as well as micro basis in terms of sectoral movers as well on crude. Of late, crude has gone a little sideways. Are you getting a sense of where crude maybe headed directionally or is it still a big black hole?
Crude has disappointed me. I thought crude would have cracked. $71-72 is a very important support area for Brent crude. I feel that we can head lower, back to the $65 area which tends to be an area of comfort for the Indian economy and most other participants and companies. I am looking at $71-72. Crude could be in for a sharp slide and that could be another positive trigger for our market. But yes, at the moment, it is misbehaving a bit, jumping to $73-74. That will be an area of worry but I kind of feel that this level of 71-72 will get taken out and if that is taken out, that is going to be another positive for the Indian markets.
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