Worried about dollar strength, commodities in 2016: JPM AMC

With most global markets rallying on Tuesday and oil price recovering a bit, Ian Hui, Global Market Strategist at JP Morgan Asset Management believes it could be because the Fed uncertainty with regards to rate hike is out of the way but he is still worried about the dollar strength and commodity weakness in 2016 and so expects equity markets overall to remain volatile in first quartile of 2016.With China expected to growth slowly next year too, there would be pressure on commodities, says Hui adding that oversupply concerns would continue to weigh on oil prices going forward.With regards to India, he thinks the underperformance for the market will continue on back of policy (GST) concerns and uptick in inflation but amongst other emerging markets next year would still be generally positive for India. Below is the verbatim transcript of Ian Hui's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Sonia: What is the sense you are getting about how equity markets will be approached in the first half of 2016? A: We have seen a rally over the last few days. I think a lot of the market has taken ever since the Fed rate hike last week to be a loss of any uncertainty where a lot more are sure of where we are going. For next year though there is probably still a bit of uncertainty lurking around. We are still probably most worried about the dollar strength. What will happen policy-wise, we are still divergent on what we are seeing in monetary policy between number of countries. So I still say that things could still be quite volatile. It does depend though on how the Fed moves, and how a lot of the Central Bank would most likely see the policy going. Latha: What is your sense about the debilitating fall we saw in commodities all through this year? Has that stabilised? We have seen a few days of stability in metal prices and in crude? A: On commodities, I still see it going fairly weak into next year and most of this is due to lot of issues we see in oversupply and from the reaction we have seen from commodity producing countries. I still think commodities are going to remain weak overall. We did see the annual economic conference in China where the government did announce various measures that they are going to try and push forward next year to end oversupply or overcapacity in China but overall I still think that China is still going to probably remain slower for next year. Sonia: Give us one final word on how to approach the Indian markets. We have seen a fair degree of underperformance in India so far, you would expect that to continue? A: I do expect that to continue. I know India has done bit positively over the last three days but my main worries for India so far are on the policy side - are we going to see any sort of investment in for the goods and services tax (GST) policy that we have been waiting for quite a while. We saw inflation arise over the latest inflation reading, although I don’t think that is a significant worry but it will be still something to watch for and also added to that is the worries over the deficit. We did see the balance of payments figures come out for India. It has increased, especially Indian government's desire to help with the energy companies debt issue. However, overall I still think India is still in fairly good position compared to other emerging markets. The lower oil price should help them, they are less reliant on trade and less reliant on what is happening in China. So while India still might have some issues, I still think it is still generally positive overall going forward into next year. However, a lot will depend on what is happening with policy0wise. If GST knock back and not pass for this another government session, I think that might be quite worrying for markets.