Moneycontrol Pro Panorama | 'World is already at war'

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Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

An upbeat festive mood seems to have set in. The week began with good tidings on Monday morning. India’s Services Purchasing Manager’s Index (PMI) jumped from 55.5 percent in July to 57.2 percent in August, propelled by new businesses, demand improvement, and the sharpest rise in employment seen in 14 years.

This gave a leg-up to the composite PMI that also rose from 56.6 in July to 58.2 in August. Raising the private sector confidence is the resilient domestic economy and softer operating expenses as the rate of inflation faced by services and manufacturing firms retreated to a 19-month low in August.

Therefore, the bets are in favour of a strong structural growth story panning out in domestic consumption and weak cost pressures.

But it is hard for India to steer away from the rising global headwinds. Inflation is stubbornly high and the rate of growth low in developed economies such as Europe, the UK, and the US, with added posers from a strong dollar and China’s slowing.

Indeed, there may be several perspectives on the current mix of low global growth and high inflation as detailed in Manas Chakravarty’s article, The apocalyptic vision of Zoltan Pozsar. The article also highlights investment guru Pozsar's latest report ‘The world is already at war’, which states that while the ‘hot war’ may be limited to Ukraine, for the moment, but the economic war is all-pervasive.

Security becomes most important during war and it often leaves no place for economic logic. Lower costs and global supply chains could give way to control and countries could pour in billions of dollars, for economic security. This could have a ripple effect on all economies — inflation could remain high as growth falters.

Besides, there is no doubt that geopolitical risks too are no longer restricted to Russia and Ukraine. The US-China standoff over Taiwan is a cause for concern. And read this FT story (available only for MCPro subscribers) on how Russia has built a formidable presence in Africa.

Investing insights from our research team

Should investors subscribe to Tamilnad Mercantile Bank IPO?

Balaji Amines: Value unlocking opportunity on the cards

Concor – A solid long-term buy

What else are we reading?

SEBI’s circular on Algo trading is a good step, but will impact the industry

The Eastern Window: Can India gain from UN report against human rights abuses in China?

Etadapi Gamisyati: This too shall pass

RBI’s moment of truth on exchange rate is upon it

Cyrus Mistry | A business leader with a global outlook, but strong local moorings

Defence | India, US joint military exercise could bring in new technologies for Indian Army

Technical Picks: Silver mini, HDFC, USD-INR, Hindalco Industries, SBI and Arvind (These are published every trading day before markets open and can be read on the app).

Vatsala Kamat

Moneycontrol Pro