Latest news with #RossMaxwell
Mint
04-07-2025
- Business
- Mint
With the US dollar at multi-year lows, could Indian stock market see a surge in FPI inflows?
The Indian stock market has seen a resumption of overseas inflows in recent months, driven by easing global trade tensions, improving domestic fundamentals, and expectations of an earnings recovery in FY26. Though foreign remained net buyers over the last three months, the aggressive selling during the first quarter of 2025 more than offset the recent inflows, keeping their overall stance negative for the year so far, with total outflows standing at ₹ 1.3 lakh crore. Nevertheless, analysts expect that inflows may increase in the near future amid a sharp drop in the US dollar, which crashed 11% in the first half of the current calendar year, marking its steepest half-year decline since 1973 and its weakest six-month performance since 2009. At the current level of 97, the dollar index is trading at the lowest level since February 2022. Ross Maxwell, Global Strategy Operations Lead at VT Markets, said a weaker USD, especially when tied to expectations of rate cuts in the US, will generally have a positive impact on Foreign Institutional Investor behavior, as investors will rotate from developed markets into emerging markets to seek higher yields. This can have a positive impact on Indian equities, as it brings more capital inflows into the country, supporting the rupee and lowering bond yields. He noted that a strong rupee and lower import costs due to the weaker dollar can improve margins for big sectors in India such as aviation, chemicals, and consumer goods. Lower prices for USD-denominated commodities such as metals and crude oil will reduce inflationary pressures and boost Indian companies, although some export sectors such as IT and pharmaceuticals may face challenges. Maxwell added that overall returns on Indian assets can also increase, as the cost of hedging positions decreases with a weaker USD, which can boost investor capital flows into bonds and equities. 'When we see a rotation from investors into emerging markets, India is often one of the first choices due to its macroeconomic stability and large consumer market, which is why I think we can see further gains,' he said. Brokerage Elara Securities, citing historical data, also made a case for an 8-10% rise in the Indian benchmark index amid USD weakness. "In each of the 8 years when the DXY fell more than 5%, the Nifty posted positive returns—with a median gain of +34%. To date in 2025, despite a 9% DXY decline and a –0.9 correlation, the Nifty is up a mere 7.5% YTD. If past patterns hold, an additional 8–10% upside appears plausible," it said. With FII shareholding near low since Sept 2017 and a macro backdrop resembling prior recovery cycles — rate cuts, benign inflation, and external stability — the environment remains supportive, it said, expecting it to play out through a selective high beta rally. That said, Maxwell cautioned there are some challenges ahead. If US recession fears persist and this translates into investor fears over a global recession, then this could hurt market sentiment and dampen demand for Indian exports. He also warned that if geopolitical tensions rise, we may see a return of risk-off sentiment, which can prompt investors back to safe havens in the short term, hurting Indian markets. Maxwell advised traders and investors to keep a close eye on the US earnings season for clues on how the US economy is performing. Whilst the Fed is expected to cut rates, he noted, 'we should look for clues from the Fed about any potential concerns over inflationary issues caused by tariffs that could force them to increase rates and therefore strengthen the USD again.' Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
Mint
06-05-2025
- Business
- Mint
RIL, IOC to Asian Paints: Which stocks to buy as crude oil prices crash nearly 20% YTD?
Stocks to buy: Crude oil prices have been on a slippery slope for most of 2025, shedding almost 20% on a year-to-date (YTD) basis, with Brent crude prices briefly slipping below the $60/barrel mark on Monday. While the crude oil prices rebounded to $61 level today, May 6, they have tumbled almost 10% over the past six sessions alone. This fall in oil prices come amid two factors: rising OPEC supply amid weak demand and US-China trade war. Crude oil prices in international market declined by more than 18% in April due to continues rise in production by key oil producing nations like OPEC cartel and trade disputes globally which hampered oil demand, said Vishnu Kant Upadhyay, AVP - Research & Advisory, Master Capital Services. On Saturday, OPEC+ agreed to further speed up oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd). The June increase by eight participants in the OPEC+ group, which includes allies like Russia, will take the total combined hikes for April, May and June to 960,000 bpd. That represents a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations. Against this backdrop, ING and Barclays also lowered their Brent crude forecasts. While Barclays reduced its Brent forecast by $4 to $66 a barrel for 2025 and by $2 to $60 for 2026, ING expects Brent to average $65 this year, down from $70 previously, as per a Reuters report. While falling crude prices have put commodity traders in a fix, it could act as tailwind for the slowing Indian economy and also boost the domestic stock market. Explaining the impact of falling crude prices on the Indian economy, Ross Maxwell, Global Strategy Operations Lead, VT Markets, said India is one of the world's largest importers of crude oil, importing more than 80% of its crude oil needs. When crude oil prices come under pressure, it generally means good news for India, as it reduces India's import bill and can support the rupee which will help encourage foreign investment, he said. The falling crude prices also help reduce inflation as it lowers the cost of fuel and transport costs across a variety of sectors in the Indian economy, driving up profit margins for sectors that rely heavily on crude oil and helping earnings, Maxwell added. Not just the economy, falling crude prices also spell good news for the Indian stock market. Analysts believe the already rising stock market (up 10% since March 2025) could gain from falling crude prices, although it cannot be the only factor driving gains. Crude oil prices falling is a positive development for the Indian equity markets, as India imports over 80% of its crude oil requirements, said Kunal Kamble, Sr. Technical Research Analyst at Bonanza Group. Cheaper oil translates into lower transportation and manufacturing costs, which helps ease CPI inflation. This, in turn, provides room for the Reserve Bank of India (RBI) to consider rate cuts or maintain a dovish policy stance, he explained. Upadhyay of Master Capital Services, believes that the positive effects of the falling crude prices could strengthen the case for further gains in Indian equity market that should be containing around 24,800-25,000. However, Aamar Singh Deo, Sr VP Research Angel One, said the rally in Indian equities cannot be just factored on fall in crude oil prices. FIIs have come back strongly in markets and have continued their buying spree along with some positive talks going on between US and China on trade talks has led to market sentiment turning positive, he added. The sectors which are likely to gain from falling crude prices are those that rely heavily on oil. These include aviation, automotive, paints, oil marketing companies and refineries and FMCG. Here's what analysts recommend buying: Sumit Pokharna, VP-Fundamental Research, Kotak Securities, is bullish on Reliance Industries. RIL processes crude oil and sells finished products domestically and also exports them. Lower crude oil prices are positive for refiners, he said. "We believe long-term investors can buy RIL. We are positive on RIL and believe there are multiple triggers for the company to grow," Pokharan said. Aamar Deo Singh, Sr VP-Research at Angel One, said falling oil prices help in easing inflation, which helps in bringing down transport and production expenses. "Many industries benefit in such times, such as plastics, adhesives, oil-based paints and dyes, are set to go down as input costs plummet for these companies, leading to higher operating margins for these industries. Also, oil market companies benefit from this decline. In the paint space, Berger Paints looks good. In the adhesive space, Pidilite can be looked at, and in the CV space, Ashok Leyland looks fine," said Singh. Vishnu Kant Upadhyay, AVP - Research & Advisory, Master Capital Services, said he would recommend focusing on Indian Oil Corporation as prices are making a base formation with regaining their all key moving averages. "With the combination of technical & fundamental factors, prices are looking to pave the way for 160, 162 in the near to medium term," he said. Kunal Kamble, Sr. Technical Research Analyst at Bonanza Group, recommended buying IGL and Asian Paints. "IGL is showing strong technical strength. The stock has given a breakout from a falling wedge pattern on the daily chart, accompanied by rising volumes—a sign of growing investor interest. Price is trading above the 50-day EMA, and the RSI is trending higher, all of which support the ongoing positive price action," Kamble said. He added that Asian Paints is another stock showing potential. "While it is currently consolidating in a lower range, the setup indicates readiness for an upside move. The stock remains well-positioned for an uptrend as long as it sustains above ₹ 2,290," Kamble added. Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions. First Published: 6 May 2025, 03:14 PM IST
