Jahangir Aziz, head of Emerging Markets Economic Research at JPMorgan, on Wednesday said that the US-China trade war remains to be a material threat and added that both the parties were unlikely to reach a trade deal without getting a deal on the non-trade front, which he thinks is the biggest concern.

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“I think that already has a significant impact, not on the trade front but on the non-trade front in terms of the impact it had on global business confidence and global capex; global capex is one of the lowest we have seen in several years at this point in time,” said Aziz.

“Therefore, the trade war remains a very material threat and it is difficult to see how the two parties can come to a quick resolution on the trade front,” he added.

The European Central Bank president Mario Draghi saying that the ECB will ease policy again if inflation fails to accelerate sparked a rally across European equity and bond markets.

Aziz said Draghi's comment was a surprise but on the easier side. “The big central banks are now in easing mode and that will necessarily have a large impact on emerging markets,” he said.

He further said that India is ahead of the curve with three rate cuts, with probably more coming.

“This RBI has clearly shown its angst that it is biased towards easing... my sense is that that they are going to see through the bad monsoon impact on inflation saying that it is a surprise shock and central bank needs to see through it," Aziz said.

According to him, corporate investment remains a concern in India. "Therefore, any pick-up seen in corporate investment must be nurtured."