- Global markets face tension from potential ceasefire and stagflation risks
- Rising US Treasury yields challenge central banks on rate hikes
- Indian equities favoured due to better valuations and structural reforms
As the global economy stares down a volatile combination of high-stakes diplomacy and rising yields, Rob Subbaraman, Head of Global Macro Research at Nomura, is urging a strategy of selective resilience. In a wide-ranging interview with NDTV Profit, Subbaraman warned that the global market is currently "on edge," caught between the potential for a ceasefire and the risk of a severe stagflationary shock.
The primary driver of this anxiety is the ongoing closure of the Strait of Hormuz. Subbaraman noted that while the world previously battled supply bottlenecks during Covid-19, the current disruption is fundamentally different. "Opening the Strait of Hormuz will take time," he cautioned, adding that the resulting energy price spikes mean headline inflation will rise significantly in the coming months.
This puts global central banks in a precarious "K-shaped" corner. With U.S. Treasury yields already rising, Subbaraman believes it will be "difficult" for policymakers to continue raising rates without crushing already fragile global demand trends.
ALSO READ: Power, Capital Goods And More: Samir Arora's Sectoral Picks Amid Iran War
Despite his general "hesitation around risk assets," Subbaraman carved out a distinct exception for the Indian market. Unlike the broader global landscape where demand is cooling, he remains *positive on Indian equities.
The rationale is twofold: first, Indian valuations are objectively "better than last year," offering a more comfortable entry point for institutional capital. Second, the structural reforms of the last decade have provided a buffer that many Western markets currently lack. While the rest of the world navigates the war's "unexpected movements" in gold, which Subbaraman insists remains a vital anchor for portfolios—India is viewed as a preferred destination for those looking to diversify away from G7 volatility.
Subbaraman's outlook isn't entirely defensive. He suggests that the current obsession with geopolitical survival is a temporary, albeit painful, detour. "Once things improve," he noted, "the focus can be shifted back to AI."
ALSO READ: Bull Market Coming: Morgan Stanley's Sensex Target At 95,000 by Dec 2026, A 22% Upside
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.