The Omicron variant of COVID-19 may be less disruptive than the previous waves but will have a substantial impact, said Arvind Sanger, Managing Partner, Geosphere Capital Management.
According to Sanger, the supply chain impact is persistent. “We are now seeing that COVID-19 incidences having a bigger effect on supply chains than they are on the demand side and that persistent supply chain impact, if you note, the Shanghai container freight index, on Friday, December 17, hit a new all-time high,” he said.
“This is a seasonally slow period, all the big shipping for consumers for Christmas is behind us and a period when that index seasonally comes off sharply. It's hitting all-time new highs. So, the inflation problems are real, which is going to keep central bankers on their toes and on the meantime, COVID is going to cause some amount of a slowdown. So in a sense, we have got the worst of both worlds in the short-term,” said Sanger
In an interview with CNBC-TV18, Sanger said that the anti-inflation mood is in charge at the moment as the WPI and CPI numbers indicated rampant inflation.
“One of the biggest concerns that we have is that inflation is running rampant and we are seeing it particularly in the Wholesale Price Index (WPI) numbers, but even the Consumer Price Index (CPI) numbers are somewhat slow to show the full data and yet, RBI is still much more behind the curve than many other central banks and that will be a challenge for Indian markets and Indian rupee going forward,” he said.
Sanger said they are in "no rush to buy in the Indian market". The IT sector is proving to be resilient on a relative basis, he said.
For the entire interview, watch the video