Markets Under Pressure As Rising Oil Prices And Global Risks Weigh On Investor Sentiment

[00:00:00]Let's welcome Mr. G Chokkalingam, the founder and MD of Equinomix Research to share with us his perspective on the markets afresh. Welcome to you, Mr. Chokkalingam. Good morning. Give us your sense on how are you looking at this fresh wave of sell-off on the D-Street.

[00:00:15]You how much of it does it again have to do with the crude oil prices spiking above $92 a barrel? Does it yet again bring in $100 per barrel kind of a fear coming back onto the street? And therefore, once again, the markets retracing all of those gains that we had garnered over the last couple of weeks.

[00:00:35]>> Yeah, so it is largely to do with oil price.

[00:00:38]As you rightly said, now, after this renewed attack, oil price has gone up for over 15%.

[00:00:45]And the Brent oil is around $84. If it goes close to $100, then a lot more pain will be there.

[00:00:51]And it is very unfortunate that, you know, the attack is a conflict is happening again and again. Ceasefire is broken again and again.

[00:00:58]So, as an analyst, what do we look? And what is our understanding or our expectation going forward?

[00:01:06]I have a, you know, complete clarity. I may be wrong, but I still maintain my confidence that, you know, both Iran and US will be the major losers. Apart from that, 30 major economies who import a lot of oil, they also will become a big losers.

[00:01:23]And in fact, IMF says that Iran GDP is expected to contract over 6% this year.

[00:01:30]And Iran has already lost about $270 billion as per the industry estimates due to this war. And inflation is hovering around 68%.

[00:01:40]Even US will be the big loser.

[00:01:43]Right now, you know, things improved in June quarter, inflation came down, but both will get reversed if this war continues. And then Chinese growth also has come down to 4-year low at around 4.3% in the latest quarters. India India is also impacted. You know, single month June month, the oil import bill if you analyze, it is little bit of scary. But I still have a lot of confidence that there will be a lot of pressure within outside for both Iran and US to sit on negotiation table. Till that time we will have to face the pain maybe another few weeks or 1 month. We have to face.

[00:02:18]Only if these things go on for nearly a quarter, then pain will be more. Then the you know, one need to press the panic and generate more cash. But I will not alert that right now.

[00:02:31]Uh so in the last two three times it happened, they were forced to sit on table to discuss. Similar thing should happen. This only reminds me of you know, Indian market what we saw during 2010 to 13. Three year, you know, the Sensex was not at all moving, going up and ultimately coming down. So that kind of situation is there now from 2024 September.

[00:02:55]Index is down considerably.

[00:02:57]But I have not given up my hope. And we have seen this kind of two three year of bad cycle bearish cycle several times in the last 30 years and ultimately the investors who selected the good quality stock and who mitigate the risk through proper asset allocation, they always stood out as a gainer. So this time also I believe it would happen. The other concern is on the monsoon.

[00:03:19]Two third of the 36 subdivisions have failed to receive normal rainfall.

[00:03:24]But there are estimates that expectation scientifically from the department that after August, you know, sorry, in the end of July the rainfall will improve. The fortunately the cultivation areas under so sowing has improved a lot. So I hope the rainfall also improves.

[00:03:42]Then we'll have a very good time, you know, for the market in the short term itself.

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