Global challenges have not significantly impacted India, and 7-8% inflation is not unusual, according to Prashant Khemka
"Even if we are not fully isolated from the rest of the globe, there are enough mitigating variables in India that should lead to stronger earnings performance than in the emerging countries, according to Khemka.
admin
Prashant Khemka of White Oak Capital Management claims that despite the fact that global issues have dominated the stock market this year as a result of persistently rising inflation and central bankers raising interest rates, global issues have not significantly affected India.
"This year, there has been a convergence of variables that have influenced the world markets, but markets in India have been flat due of the concerns' less severe effects. According to the founder of the investment management firm, India's inflation rate of 7-8% is not out of the ordinary.
He further stated that during the first half of the previous decade, India's CPI (consumer price index) was in double digits and had maintained that level for a number of years. Considering that five percent has been the average over the past 20 years, 7-8 percent is not out of line.
On the other hand, Khemka claims that the contrast between the 1-2 percent inflation they are used to and the 7-8 percent inflation in the US and Europe is rather striking.
India will be a key player in the global supply chain.
According to official trade data from the EU, China is only the fourth-largest destination for Indian exports (at 5.8% of the total), whereas the EU is the second-largest after the USA (18.1%).
According to Khemka, the problems that Europe is experiencing as a result of the Russia-Ukraine war—such as energy consumption, inflationary pressures, and supply chain limitations—are "not such a negative for India" or the Indian corporate sector.
India is anticipated to play an even more significant part in the supply chain coming forward as an alternate source, according to Khemka, given what is now happening in Europe.
Not only from the perspective of equities or capital markets, but also in the business world for sourcing and manufacturing base, "India is being considered as a safe haven." These elements are supporting the optimistic view for the Indian business, he continued.
Additional favourable elements at play for India
S&P Global Ratings forecasted India's economic growth at 7.3 percent, designating it as the "star" among developing market economies, despite rising energy insecurity in Europe having a negative impact on growth in practically every nation.
S&P stated in its Economic Outlook for Asia Pacific that the recovery of domestic demand following the COVID-19 pandemic will assist India's GDP in the upcoming year.
According to Khemka, there are more advantageous variables at work for India as compared to other growing markets.
According to Khemka, "a slowdown in the US and Europe may have a significant negative impact on the economy without compensating benefits for nations like Taiwan, Korea, and almost 75% of emerging economies."
"However, in India, even if we are not totally protected from the rest of the globe, there are enough mitigating variables that should lead to stronger financial performance than in the emerging economies," he continued.
