Oil to stay at $110-120/bbl this yr: Merrill Lynch

Q: Given the crude oil situation would India be one of your least favourite markets now in the Asian region?

A: Yes, it would be one of the least preferred markets in Asia if the oil prices stay high. We did an Oil Sensitivity Analysis two weeks ago using seven variables to measure the impact of high oil price on economies and stock markets across Asia  and I am afraid that India did not square very well.

Q: Is there anything else which is worrying you about India in terms of either politics or recent policy action surrounding the crude mess that we find ourselves in, which is also sort of querying the pitch for this market?

A: Of course there are political issues and issues relating to food price inflation, but these problems don't really mean as mush as the crude oil price. The Indian market has given back almost everything from the last year or so. So it is now down to valuations, which is almost  attractive for the whole market. Some large stocks in India are extremely well placed. So from a bottom up point of view I would be very comfortable with a few Indian stocks here.

Q: So aside from the under performance of the market as a whole, you are saying that you would want to start increasing allocation to a couple of specific sectors or stories?

A: Yes that is correct, particularly