Low crude prices good for India; remain a buyer: Macquarie

Richard Gibbs, Global Head of Macquarie Securities is upbeat on India because he thinks there is room for structural expansion and the demand is much better than anywhere else in the world.According to him reduced crude prices goes in favour of the Indian economy and gives RBI a scope for monetary accommodation. It is also likely to produce some tailwind for the global economy.  "It certainly provides latitude on the trade side but also in terms of the inflation side for the economy as well." The house remains a buyer on India.Below is the transcript of Richard Gibbs' interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18.Latha: What is the sense you are getting. Are we now facing a fairly big challenge to global growth and therefore are risk assets going to head lower?A: I think the International Monetary Fund (IMF) is articulating that fairly well as we move into the IMF World Bank annual meeting in the next few days. It really is a case where the US is I suppose the best if you see IMF’s parlance and that’s for investors who have been searching for growth is a disappointment. So, now I suspect we are going to have people turning back towards in search for yield and that has become difficult as well with the expansion in quantitative easing measures around the world but most particularly by the European Central Bank of course.Reema: Should we start worrying about the 20 percent slide that crude prices have seen from their highs in 2014 and what it means for global growth?A: At the end of the day lower crude prices are probably growth positive and the issue there is whether they pertaining further disinflationary pressure/deflationary pressure in the major economies. Certainly for an economy like India, cooling in crude prices is a positive. It certainly provides latitude on the trade side but also in terms of the inflation side for the economy as well. It’s a bit of a two-edged sword as I suppose in that sense but overall lower crude prices are likely to produce some tailwind for the global economy. But in this environment where people are fretting about excess capacity and disinflationary pressures, is likely to be taken as another major of those pressures on the rise.Latha: Would you say that most global equity markets, risk markets have seen the best for the year, is that the sense you are getting because we have economists talking about near recessionary conditions in Germany, Draghi didn’t mince words yesterday when he spoke about the need to correct excessively low inflation. The words are getting a bit scarier and the news from China as well wasn’t very good when the industrial growth numbers came in last week. Are you getting a sense that all the risk markets have seen their best for the year?A: I think that is probably right. The question you have to ask yourself if you are challenging that is what would produce a renewed rally in those risk markets in the November-December period because October is traditionally a fairly lacklustre month. So you have to say, well it is not going to come out of the euro zone because we have people talking about recessionary conditions and we have got belief that the ECB may not have done enough to stabile those disinflation deflation pressures.

So the hope of the side if you like has got to do with the US and the US economy. It is a question whether we are going to see the US surging even more to lead that renewed appetite for risk assets. So I suspect on that basis, probabilities are that we have actually seen the best for those markets for this year.Latha: You remain a buyer on India?A: Yes, I do. I think demand I have seen in India is probably in better shape than a lot of economies around the world and also there is room for structural expansion there.I do think we need to take seriously, the positive impact of this reduced crude prices that we have talked about and I don’t think we can dismiss that lightly. The hope there of course from my perspective is it would provide scope for the RBI to provide some monetary accommodation that is to cut interest rates.