Oil at $90-100 will impact macros and the market: Sunil Koul, Goldman Sachs
There is room for some catch-up rally in India after the underperformance and improvement in earnings growth, said Sunil Koul, global emerging markets equity strategist
There is room for some catch-up rally in India after the underperformance and improvement in earnings growth, said Sunil Koul, global emerging markets equity strategist, Goldman Sachs. In an interview with Nishanth Vasudevan, London-based Koul spoke about foreign investors' outlook for India, the semiconductor trade and the rupee, among other topics. Edited excerpts:When you talk to global asset allocators, what are they saying about India?We have got more incoming requests for calls and meetings on India over the last couple of weeks than we have had in the last three to six months. Both the economy and corporate earnings have held up pretty well. The recent RBI measures have given people comfort that the rupee may not depreciate meaningfully from current levels. And then there has been more volatility in semiconductor stocks and the AI trade over the last two or three weeks. There has been a growing desire to diversify portfolios away from the tech side, where positions have been very concentrated. So, we are arguing for performance in Asia to broaden a little bit and for some of the laggard markets to recover. In that sort of laggard recovery rally, India should be able to perform better as well.Read more: UTI AMC's V Srivatsa warns against midcap valuation, says risk-reward better in largecapsWhat has been the nature of the recent foreign flows into Indian markets?The initial leg of the flows from mid-June was a broad-based pickup in interest in oil-importing markets, including India and South Africa.
Moving into July, we have started to see some rotation flows within Asia. So, it's a mix of long-short allocations improving and some long-only money starting to allocate more.Now that oil has rebounded, is that bad news for Indian equities?Unless and until you see a full-blown war, which is not our base-case expectation, and an almost complete stoppage of flows, our year-end forecast for Brent crude is $80. That should be absorbed by the economy and the equity market. But, at the margin, it does put pressure on sentiment. If oil goes back to the $90-100 range, it will start to impact the macros and the market.What is your reading of the recent sell-off in South Korea and Taiwan?We are still pretty positive on the fundamentals of the memory space. Earnings of these companies in Korea and Taiwan have actually been strong, and the guidance has also been strong. We are in a cycle where demand is far stronger than supply. We are seeing tightness in the market, not just in 2026 and 2027, but well beyond 2027.This year, because of pricing, Korea's earnings growth is more than 300%.
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