Currently, the crude prices have hit the 5 year low level of $60/Barrel. This will put a lot of pressure on overall energy industry. There is strong relation of Dollar and the Oil Prices. If Dollar is getting stronger then oil prices declines. Currently, It is getting stronger and assuming that Fed will be increasing the interest rate in mid 2015, Again it will strengthens. The 2015 is expected to be the record year for Crude Production.
The China is expected to continue to see the pressure on the inflation front and the growth is highly questionable.
So, where’s the opportunity and where is the risk –
Risk is – Do not see exposure to companies belonging to the countries which are energy export dependent like Australia and others.Companies which are heavy export oriented in US or which has net receivables in Dollars (Because their revenue will be lower on Currency Translation)
Opportunities will be with the companies which are belonging to countries having high energy imports. The countries will be seeing there reduced Current Account Deficit and will allow policy makers and central banks more flexibility in terms of growth oriented policies.
Overall I am looking at India to be in the sweet spot to capitalise all the aspects. The Benchmark growth will confirm this thing.
For International Readers, Please look at the Indian ADRs listed on US stock exchange and the India ETF.
