Economic package a big relief for India Inc; bodes well for commodities market: S.K. Jindal

New Delhi: The Rs 20 lac crore economic package aimed at making India self-reliant has come as a big relief for trade and industry, particularly the MSME sector, experts said in an ASSOCHAM webinar thereby warmly welcoming announcement made by the Prime Minister Narendra Modi.

“The package also bodes well for the commodities market which before Covid-19 pandemic had struck were functioning in a smooth and normal manner, however the immediate impact was a very-very high level of volatility and impact on investors and participants,” said Mr S.K. Jindal, chairman, ASSOCHAM National Council for Commodity Markets in an ASSOCHAM webinar on ‘Impact of Covid-19 on Commodity and Derivatives Market & Future Direction,’ held yesterday evening.

Noting that Covid-19 has been an unprecedented situation being faced by countries across the globe, economy will take approximately 1.5-2 years’ time to stabilise, besides foreign flows will also dry up for next 18-24 months, felt many experts who participated in the webinar.

“There would be too much of uncertainty after the lockdown is lifted by governments across the globe. I think 1.5-2 years would be something that we would be looking forward for kind of normalisation of the markets or the global economy,” said Mr Naveen Mathur, director, Anand Rathi Share & Stock Brokers Ltd. in the webinar.

Talking about the impact of Covid-19 on commodity markets, Mr Mathur said, “There would be a differentiation between commodity to commodity, risk-averse commodities would do well while the commodities that are directly related to economy, infrastructure and need of the day would be impacted. Overall for commodities market, except for a very few, demand would be very muted.”

During the interaction Mr Kishore Narne, associate director, Motilal Oswal Financial Services Ltd stated, “We will see further more depreciation of currency in domestic markets because of government borrowings. Foreign flows will dry up for next 18-24 months, so we will not see major foreign flows.”

Sharing an insight on his interaction with some fund managers he said, “Funds like Japanese Retirement Funds, which are very sticky funds, they are moving out of emerging market economies including India so, the long-term funds are going out of the country, that is a problem for us.”

On a positive note, Mr Vijay Sardana, a commodity market expert and member, CDAC, SEBI said, “For India it is a turning point and hopefully we will emerge out stronger from the Covid-19 crisis. This is a great opportunity for India, across the platforms whether it is agro-commodities, metals etc.”

Based on his interaction with policymakers, Mr Sardana said, “Hopefully within next 2-4 days we will see certain key agriculture-sector specific reforms which would give a chance to commodity markets to open up.”

Talking about the need for India to understand its requirements, Mr Sardana said, “We would have to do price discovery, risk management and make laws as per prevailing market trends here to ensure that economy grows rapidly because otherwise we cannot generate jobs.”

Highlighting the importance of job generation in India, he added, “The day we adhere to an employment oriented economic policy, it will push India’s tax revenue and GDP automatically as employment will push consumption growth, increase industrial utilization and which in-turn will spur growth in demand of commodities. For this we will have to bring in technologies to further increase production of our commodities which would also lead to their efficient handling and minimise wastage.”

Other panellists that participated in the webinar included – Mr S.C. Aggarwal, managing committee member, ASSOCHAM and CMD, SMC Global Securities Ltd.; Mr Kapil Dev, EVP & Head – Product & Business Development, NCDEX Ltd. and Mr Rishi Nathany, Head – Business Development, MCX.