Max Life’s Mihir Vora Lists Key Near-Term Challenges For Indian Markets Amid Russia-Ukraine Tensions

As geopolitical tensions escalate, Max Life Insurance Co.’s Mihir Vora sees risk appetite, global flows, commodity price surge and impact on currency as key issues facing India’s stock markets in the near term.

“The risk appetite and the global flows are a big factor. Next, we are observing oil and commodity prices. That’s a negative for India—oil touching $100 a barrel,” said the director and chief investment officer at the insurance company. “And most of the commodities are rising, not only because Russia is a big producer of commodities, but also because Ukraine is also a major producer of commodities—agricultural, metals and oil. We have this ‘commodity complex’ that can go up, which is not good for India, mostly a consumer of commodities and oil.”

Russian forces attacked targets across Ukraine, triggering the worst security crisis in Europe since World War II and raising threats of further punishing sanctions in response. That pushed up the prices of crude to gold.

While the “second- and third-order implications” of the geopolitical events in Ukraine are yet to be understood, Vora cautioned that the “time is not ripe to go in and aggressively buy in the market”.

“We are not going all out today itself and buying stocks because there are too many moving parts—oil is critical to our net imports, currency and inflationary pressures. It can have an impact on the Reserve Bank of India’s policy and mindset in the next meeting. A lot of these are interconnected,” Vora told BloombergQuint’s Niraj Shah in an interview.

He, however, clarified that Indian equities remained “fairly valued”, but the risks of oil and inflation and the Ukraine situation are immediate constraints. The reversal of fortunes for markets, he said, could also be “drastic, just as the correction has been”.

You can watch the full interview of Mihir Vora with BloombergQuint here: