Investors including Quantum Asset Management Company and ICICI Securities Primary Dealership Ltd are advised to hold cash. Stock traders are also treading caution, says TCG Advisory Services, moving towards software and pharma exporters, who benefit from a weaker rupee. The central bank is faced with a daunting task, as well as keeping interest rates low, amid the risks of rising inflation and increasing volatility in the market.
Mihir Vora, Director and Head Investment Officer at Max Life Insurance Company. “In times like these, cash is the only safe haven.”
Here is a snapshot of the impact on the major asset classes:
Rupee:
According to Standard Chartered Plc, the rupee, which fell to a record low of 76.9812 on Monday, could widen the deficit to 77.50 per dollar by the end of the year.
Given that India is dependent on imports to meet around 85% of its oil requirements, the country could be the most exposed in Asia to a nearly 60% jump in Brent prices this year. The rise in crude risks worsening price pressures, hurting finances and hampering the recovery of the economy.
“The future trajectory will depend on how high oil prices persist,” said Gaura Sen Gupta, economist, IDFC First Bank Ltd. Maintain devaluation pressure on the rupee.
stock:
The S&P BSE Sensex index lost 2.7% on Monday and lost 1.1% on Tuesday to 8.3% this year. The index’s failure to hold the upper limit of the so-called Ichimoku weekly cloud at 54,000 saw the benchmark test and find significant support in the 52,400 area. Any fall below this level could bring the 50,000 support into focus, amid concerns that higher oil prices could squeeze the company’s profits.
Chakri Lokpriya, Chief Investment Officer, TCG Advisory, said, “With the rupee at a record low, foreign investors will continue to sell local stocks and bonds until the conflict in Ukraine is resolved and commodity prices stabilize. are starting to happen.” Services.
Sovereign Bond:
Bonds appear most vulnerable to oil-price shocks in emerging debt markets in Asia. Yields jumped an average of 10 basis points during the most significant crude spikes in recent history, according to a Bloomberg analysis of seven such events before 2015. Yields are over 20 basis points in almost two weeks despite assurances from policymakers. There will be no further bond auctions till the end of the month.
Naveen Singh, Executive Vice President and Head of Trading, ICICI Securities Primary Dealership said, “It is better to stick to cash as much as possible. “It could be a bloodbath once the new supply of bonds starts in April.”