First, your opinion on the comment from Alaska and also from the Minister of Foreign Affairs, S. Jaishankar, about the import of Russian crude oil, which currently seems to be the most important point of discussion between the US and India.
Rajeev Agrawal: It is quite clear that both India and the US harden their position on tariff issues. Oil, which initially seemed a side effect, is increasingly becoming central. I personally believe that it is more fundamental problem that India and the US have to work together.
Rates are a small concern and may not poison the relationship. But the way things go, it becomes more difficult for the two countries to work with, because both parties become rigid. This is not good for the long -term relationship.That said, I think it all depends on diplomatic relations, especially in the light of Navarro’s comments last night. What should the markets look forward to in the short term, especially with the upcoming Jackson Hole speech by Jerome Powell? Any indication in which way interest rates can move?
Rajeev Agrawal: There are signs about interest rates that inflation in the US is increasing. Now that inflation is rising, Jerome Powell is trapped between lowering rates, what Trump wants, and tackling an economy that may already be overheated due to rates and rising costs. It is a difficult position for Powell. As more data comes in, it can become clear that cutting back aggressive speeds is not possible. On the other hand, the Minister of Finance expects considerable cuts. So we will have to wait and watch. Based on current data, it seems that there is only a limited space for tariff reductions.
What do you think of the comments from Russia and China? Russia has said that if the US is not willing to accept Indian goods due to rates, the markets are open to India. Similarly, China has made a similar explanation. Who wants to win most now that both Russian and Chinese markets are open to India?
Rajeev Agrawal: It is very interesting how quickly the pivot happened. A month ago we could not have imagined this, especially not from China. The sudden shift in geopolitics shows that it is largely a matter of convenience for all parties involved. From a long -term perspective, India clearly tries to strengthen its negotiating position, and this is a way to do it. With the upcoming SCO meeting it is important to have such an offset, and this development offers exactly that.So what does this all mean for Indian investors? With GST rationalization that offers a boost, where should investors concentrate?
Rajeev Agrawal: If you look at the intake of Indian retail investors, they have more than compensated the outflows we see. As long as domestic investors continue to pump money – and there is still a large amount of cash on the sidelines in investment funds and elsewhere – there is sufficient liquidity. Given that this inflow, and the belief that rates will not significantly influence economic performance, this can remain a side issue instead of a real drag on markets. What investors should pay attention to are business profits – if quarterly results disappoint, the markets can influence more meaningful.
At home, many sectors such as car and FMCG show a strong momentum. What are your sectoral choices on the current market?
Rajeev Agrawal: I just want to touch the GST problem first. The rationalization of the 5% and 18% plates, especially with Premier Modi that mentions it from the Red Fort, has been taken very positively by markets. If it is done well, it could offer a large boost to sectors such as Auto and FMCG, where the demand is somewhat modest. It is unlikely that this rationalization causes a large loss of income, so I see it as a strong positive. More reforms can add further momentum.
When I come to the sectors, I will continue to like BFSI, because it has been injured in the past but remains fundamentally strong. Some automatic segments must also do well, since the question is because India has a solid automatic production base. FMCG is a bit more difficult – while the sector could benefit from GST reforms, valuations are already expensive. One must therefore be careful with the expectations of growth versus valuations.
#Retail #flows #markets #strong #global #uncertainty #Rajeev #Agrawal