Amid global factors dominating the stock market this year due to a sustained level of high inflation and central bankers hiking interest rates, Prashant Khemka of White Oak Capital Management has said that global issues have not acutely impacted India.
"A confluence of factors have affected global markets this year, but markets in India have been flattish because the issues have not impacted as acutely. Inflation in India at about 7-8 percent is not outside the range of what we're used to," said the founder of the investment management company.
He also added that India's CPI (consumer price index) has been in double digits during the early part of the last decade - that sustained for several years. The average over the last 20 years has been about five percent so 7-8 percent is not far from the norm.
On the other hand, 7-8 percent inflation in the US and Europe compared to 1-2 percent that they're used to, is quite dramatic, according to Khemka.
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India to play major role in global supply chain
The European Union (EU) is the second-largest destination for Indian exports (14.9 percent of the total) after the USA (18.1 percent), while China only ranks fourth (5.8 percent), according to EU's official trade data.
The issues faced by Europe because of the Russia-Ukraine war such as energy consumption, inflationary pressures and supply chain constraints are "not such a negative for India" or the Indian corporate sector, according to Khemka.
"With whatever is happening in Europe now, India is expected to play an even more important role in supply chain going forward as an alternative source," said Khemka.
''India is being viewed as a safe haven, not only from an equity or capital markets perspective but also in the corporate world for sourcing and manufacturing base. These factors are contributing to the positive outlook for the Indian industry,'' he added.
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More positive factors at play for India
Amid increased European energy insecurity hitting growth in almost every country, S&P Global Ratings projected India's economic growth at 7.3 percent, pegging it as the 'star' among emerging market economies.
In its Economic Outlook for Asia Pacific, S&P said India's growth next year will get support from domestic demand recovery after the COVID-19 pandemic.
If India were to be compared to emerging markets in general, there are more positive factors at play for the country, according to Khemka.
''A slowdown in the US and Europe may impact a large proportion of the economy in a negative manner without offsetting positives for countries such as Taiwan, Korea and around 75 percent of emerging markets,'' Khemka told CNBC-TV18.
"Whereas in India, there are enough mitigating factors that should result in better earnings' performance than in the emerging markets even though we are not completely insulated from the rest of the world," he added.
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