Uncertainties for 18-24 months
International funds are leaving emerging markets amidst uncertainties for the next 18-24 months, experts believe.
Japanese Retirement Funds, for one, is moving out of India and other emerging markets, participants at a New Delhi webinar heard on 14 May 2020.
“Funds like Japanese Retirement Funds, which are very sticky funds, they are moving out of emerging market economies including India so, the long-term funds are going out of the country, that is a problem for us,” Kishore Narne, associate director, Motilal Oswal Financial Services Ltd, told the webinar.
“We will see further more depreciation of currency in domestic markets because of government borrowings,” added Kishore Narne, associate director, Motilal Oswal Financial Services Ltd.
“Foreign flows will dry up for next 18-24 months, so we will not see major foreign flows,” he pointed out at the webinar organized by the ASSOCHAM.
“There would be too much of uncertainty after the lockdown is lifted by governments across the globe. I think 1.5-2 years would be something that we would be looking forward for kind of normalisation of the markets or the global economy,” said Naveen Mathur, director, Anand Rathi Share & Stock Brokers Ltd in the webinar organized by the ASSOCHAM on 14 May.
Talking about the impact of Covid-19 on commodity markets, Mathur said, “There would be a differentiation between commodity to commodity, risk-averse commodities would do well while the commodities that are directly related to economy, infrastructure and need of the day would be impacted.
“Overall, for commodities market, except for a very few, demand would be very muted,” he feels.
The webinar looked at Rs.20 lakh crore economic package aimed at making India self-reliant has come as a big relief for trade and industry, particularly the MSME sector. The theme was ‘Impact of Covid-19 on Commodity and Derivatives Market & Future Direction’.
The package also bodes well for the commodities market which before Covid-19 pandemic had struck were functioning in a smooth and normal manner, however the immediate impact was a very-very high level of volatility and impact on investors and participants,” said S.K. Jindal, chairman, ASSOCHAM National Council for Commodity Markets in the webinar.
Vijay Sardana, a commodity market expert and member, CDAC, SEBI, had a positive note for the participants.
“For India it is a turning point and hopefully we will emerge out stronger from the Covid-19 crisis. This is a great opportunity for India, across the platforms whether it is agro-commodities, metals etc,” said Sardana.
Talking about the need for India to understand its requirements, Sardana said, “We would have to do price discovery, risk management and make laws as per prevailing market trends here to ensure that economy grows rapidly because, otherwise, we cannot generate jobs.”
He elaborated on the importance of job generation in India. “The day we adhere to an employment oriented economic policy, it will push India’s tax revenue and GDP automatically as employment will push consumption growth, increase industrial utilization and which in-turn will spur growth in demand of commodities.
“For this we will have to bring in technologies to further increase production of our commodities which would also lead to their efficient handling and minimise wastage.”
Other panellists that participated in the webinar included – S.C. Aggarwal, managing committee member, ASSOCHAM and CMD, SMC Global Securities Ltd; Kapil Dev, EVP & Head – Product & Business Development, NCDEX Ltd. and Rishi Nathany, Head – Business Development, MCX. fiinews.com
