Emkay's Sonthalia On Oil, NSE IPO: Crude oil prices have climbed sharply amid continuing tensions in the Gulf, raising concerns for investors even as the underlying demand and earnings outlook remains strong.
Manish Sonthalia, Director & Chief Investment Officer at Emkay Investment Managers Ltd., said his base-case scenario for Brent crude is $90 a barrel, while an RBI rate hike and Brent crude reaching $120 a barrel could be possible triggers for the market going ahead.
Sonthalia told NDTV Profit that crude prices are now high enough to cause concerns, although he remains hopeful that prices will normalise towards $90 a barrel.
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He also said the demand-pull and earnings scenario is strong, while expecting the upcoming NSE IPO to attract global attention and deliver a bumper IPO and listing.
Crude Prices High Enough To Cause Concerns
Crude oil prices have remained elevated as hostilities in the Gulf continue and the prospect of a near-term peace deal appears increasingly remote.
Last checked, Brent crude was trading at $106.13 a barrel, down 1.39%, after prices climbed to their highest level since May.
Sonthalia said crude prices are high enough to cause concerns, but his base-case scenario for Brent remains at $90 a barrel.
$90 Brent Is Base Case; RBI Rate Hike, $120 Crude Possible Market Triggers
Sonthalia said he is hopeful that crude prices will eventually normalise to $90 a barrel. However, he flagged an RBI rate hike and Brent crude at $120 a barrel as possible triggers for the market going ahead.
The comments come at a time when the sharp rise in crude has brought inflation and monetary policy back into focus.
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For India, a prolonged period of elevated oil prices can increase input costs and put pressure on inflation, corporate margins and the broader economic outlook.
Brent's move above $100 a barrel has therefore become an important variable for investors as they assess the trajectory of equities and interest rates.
Demand-Pull, Earnings Scenario Is Strong
Despite the concerns around crude, Sonthalia said the demand-pull and earnings scenario is strong.
The comments indicate that he continues to see underlying support from demand and corporate earnings, even with the recent rise in oil prices.
If crude eventually moves back towards his $90 base case, some of the pressure from elevated energy costs could also ease, providing a more supportive backdrop for the broader market.
‘Whole Globe Will Be Eyeing' NSE Mega IPO
Sonthalia also highlighted the upcoming NSE IPO, which is set to be one of the most closely watched market events in India.
“Whole globe will be eyeing NSE's mega IPO,” he said, adding that NSE is expected to have a bumper IPO and listing.
The National Stock Exchange IPO will open for subscription on September 17 and close on September 21, while bidding for anchor investors will take place on September 16.
The IPO has a price band of Rs 1,700-1,785 per share, with a lot size of eight shares. The minimum investment required for a retail investor is Rs 14,280.
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NSE IPO Worth Rs 22,569 Crore At Upper Price Band
The NSE issue comprises an offer for sale of 12,64,36,650 equity shares by existing shareholders, compared with 14.9 crore shares planned earlier.
At the upper end of the price band, the NSE IPO is valued at approximately Rs 22,568.94 crore.
The long-awaited listing will give public-market investors exposure to India's leading stock exchange, making both the IPO subscription and subsequent listing important events for the domestic capital market.
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