21 Nov 2022

Outlook

  • The stimulus announced by China to boost its slowing economy was seen as disappointing and is a matter of concern.
  • Earnings are volatile because of the volatility in the cost of raw materials, including that of coking coal and iron ore.

 

Tailwinds

  • Reforms by China for the supply side seemed to have helped bring a balance in the market, as compared to an oversupply, particularly for steel.
  • Stimulus measures in China can lead to a strong recovery in economic activities, which can boost the demand for metals.
  • The demand in India could be expected to improve post the monsoon. Demand from the automobile sector may likely improve with the availability of semiconductors.

 

Key risks 

  • Economic conditions in China and domestic government policies are leading to a volatility in earnings.
  • The rise in inflation globally has pushed up prices of metals, and this has led to a destruction in demand.
  • The imposition of export duty by India has led to an oversupply in the domestic market, which could impact local premiums going ahead.
  • The fears of a recession globally are likely to be detrimental to the prices of metals

 

(House View aims to regularly provide readers with Kotak Mahindra Mutual Fund’s latest update on various sectors)

 


 

The views discussed here are as on end of Sep 2022.

The information contained herein is extracted from KMAMC internal research/different public sources. All reasonable care has been taken to ensure that the information contained herein is not misleading or untrue at the time of publication. This is for the information of the person to whom it is provided without any liability whatsoever on the part of Kotak Mahindra Asset Management Co Ltd or any associated companies or any employee thereof. Investors may consult their financial experts before making any investment decision.

The article includes statements/opinions which contain words or phrases such as "will", "believe", "expect" and similar expressions or variations of such expressions, that are forward looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with the statements mentioned with respect to but not limited to exposure to market risks, general and exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. Past performance may or may not be sustained in future.

This is not intended for distribution or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. The distribution of it, in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this material are required to inform themselves about, and to observe, any such restrictions. The sector(s) referred, should not be construed as any kind of recommendation and are for general information only.

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© Kotak Mutual Fund.2022
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
© Kotak Mutual Fund.2022
Mutual fund investments are subject to market risks, read all scheme related documents carefully.