Weakening dollar is good news for EMs: Manish Gunwani to bet on these themes
On November 29, the dollar index fell to its lowest point in three months, influenced by expectations of potential rate cuts by the US Federal Reserve.
The recent weakening of the dollar is creating a favourable environment for emerging markets, according to Manish Gunwani, Head of Equities at Bandhan AMC.
"When the dollar index weakens, we typically get a bull market in emerging markets, and the dollar is weakening, leading to near-term strength in the market," he said noting that the dollar could remain weak in the medium term.
On November 29, the dollar index, which measures the value of the US dollar relative to a basket of foreign currencies. fell to its lowest point in three months, influenced by expectations of potential rate cuts by the US Federal Reserve. These expectations were fueled by comments from Fed Governor Christopher Waller, known for his hawkish stance, leading to speculation that US interest rates might have peaked.
Contrasting with the drop in the dollar index, US consumer confidence showed signs of recovery, and housing prices continued their upward trend. Additionally, the US 10-year yield decreased to 4.28%, a significant drop of approximately 75 basis points from its recent peak of 5.02%. Market attention is now focused on the upcoming release of the PCE price index, an essential measure of inflation that the Federal Reserve closely watches.
Gunwani listed energy transition, real estate, US generic-based pharma, auto, and mass consumption-based sectors as his preferred bets.
He does not anticipate any big reaction from the market following the upcoming elections.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
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