Even as peace talks emerge amid the raging war between Russia and Ukraine, markets are unsure if a ceasefire and consequent decline in surging commodity prices including crude oil are at all possible.

Share Market Live

NSE

To discuss and understand the big themes of 2022, CNBC-TV18 spoke to Jitania Kandhari, deputy CIO, portfolio manager for active international allocation, and head of the macro and thematic research for the EM equity team at Morgan Stanley.

First up, Kandhari stressed that the peak of inflation is not here yet. She highlighted that emerging markets like India do not have a significant inflation problem.

She said, “Markets like India do not have such a significant inflation problem. It’s the US and Europe that have more of a problem because of the gas prices there. Some of the poorer countries where food and energy is a large part of the CPI and where food and energy are imported, you will see inflation issues in some of those smaller countries in emerging markets (EMs).”

On crude oil price inflation in India, she said that she isn’t too worried about it. She expects India to follow the US market in terms of patterns. Additionally, she mentioned that the Indian banking system looks interesting if the credit cycle restarts.

Also Read: Indian economy better placed to deal with any challenge, says RBI governor Shaktikanta Das

According to her, emerging markets would see a comeback and domestic economies will do well. She expects Latin America and Indonesia to benefit from the boom in commodity prices.

“Countries like Latin America or Indonesia, Malaysia will benefit from the commodity price boom and I am positive there. There are other pockets where domestic demand in this de-globalising world, where supply chains are getting domestically oriented, where the world is just turning overall inward. So, domestic economies will do well,” said Kandhari.

Also Read: RBI central board discusses impact of geopolitical crises on Indian economy

In the US, she said that the economy would see a slowdown. However, detailing on the yields, she clarified that they aren't signalling a recession. She added that historically, mid-term election years have always been volatile. The average drawdown in S&P500 in a mid-term election year is 18 percent, she shared.

She said, “What’s important for the market is going to be earnings but the other piece here is the mid-term election year in the US. So, in the history of the election cycle, the mid-term election year is always a volatile year and this has been a pattern that has been consistent in every presidential cycle and that means a volatile year. The average drawdown in the S&P in the mid-term year is 18 percent versus between 12 and 13 percent on an average year.”

Watch the video for the full interview.

Catch all the latest updates from the stock market here

First Published:Mar 30, 2022 1:07 PM IST