US recession headwind still a threat to Indian markets: Arvind Sanger
One of the major headwinds that the Indian markets are facing is the US recession. Despite the ongoing COVID-19 pandemic, the US economy has been showing signs of recovery, but it remains a challenge for the Indian markets.
The dollar extended gains against a basket of currencies on Tuesday after Federal Reserve Chair Jerome Powell said that the US central bank will stay the course until the job is done, adding that the ultimate level of interest rates is likely to be higher than previously anticipated.
Powell also said that the Fed is prepared to increase the pace of rate hikes if data indicates it is warranted. That comes after the bank slowed the pace of its tightening to 25 basis points at its last two meetings, following larger hikes last year.
One of the major headwinds that the Indian markets are facing is the US recession. Despite the ongoing COVID-19 pandemic, the US economy has been showing signs of recovery, but it remains a challenge for the Indian markets.
In an interview with CNBC-TV18, Arvind Sanger, Managing Partner of Geosphere Capital Management said that after the Fed announcement, he believes the US recession headwind is still a threat to Indian markets. However, he believes that there are more legs for India's growth story to pan out.
He said, “I don't think India emerges unscathed. I talked about three headwinds; the China headwind is gone, but the US Fed recession risk headwind and India is not completely divorced from global growth. So, in that sense, that headwind will remain. So, looking at more domestic facing companies, in our opinion is a better way to play the India story than the global story.”
Geosphere Capital is more bullish on India now. The country's economic fundamentals are strong, and there is a lot of potential for growth in various sectors. There have been a lot of innovations in India with regard to digital payments, which is a positive sign for the future.
However, one country that continues to disappoint is China. The ongoing trade tensions between India and China have impacted the Indian markets, but Sanger believes that the situation will eventually stabilize.
(Text input from Reuters)
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