Credit Suisse, one of the world's largest financial services firms, has lowered its India position to 'underweight' from 'overweight.' Credit Suisse described the downgrade as 'tactical,' adding that the funds freed up from India will be used to boost its China and Australia positions to 'overweight' from 'market weight.'
The reason attributed by Credit Suisse for downgrading India is the steep jump in the global oil prices due to the Ukrainian War.
Credit Suisse highlighted, "Because of its strong structural prospects and robust earnings per share momentum, we will look for opportunities to re-enter the market, but today we tactically cut our India position. Higher oil prices hurt the current account, add to inflationary pressures and increase sensitivity to Fed rate hikes."
Raising bet on China, the report said, "We use the funds freed from India to raise China from Market Weight to Overweight. China's credit intensity still clouds long-term prospects but we like the country's low oil import bill, insulation from Fed rate hikes, improving macro indicators and wealth of potential policy tools."
It is pertinent to note that Benchmark Brent crude prices for May increased $3.07, or 2.49 per cent, to $126.28 a barrel, while WTI crude futures for April delivery jumped $2.29, or 1.92 per cent, to 121.69 a barrel. Russia is the world's second-largest oil exporter, exporting over 7 million barrels of crude and petroleum products per day.
'Oil prices may jump further'
Moreover, Russia has warned that if the West stops importing oil, oil prices may rise to $300 per barrel, and it may shut off the main gas pipeline to Germany. Following Russia's invasion of Ukraine on February 24, the United States, the world's largest oil user, has taken unilateral action to prohibit Russian oil imports.
Since February 24, when Russia began a special military offensive in Ukraine, India's benchmark indices have lost over 6%.
The battle, which is being viewed as a full-fledged war, has resulted in penalties on Russia, with rumours suggesting that some countries may impose an embargo on Russian oil imports.
