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Russia-Ukraine war: Elara Capital prefers domestic players over globally exposed companies

Jay Kale, Senior Vice President Research at Elara Capital likes domestic stories like Ashok Leyland, Maruti Suzuki India and Bajaj Auto which has exposure to the export side.

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By Sonia Shenoy  March 9, 2022, 10:50:19 AM IST (Published)

A surge in crude spells a likely sharp revision in fuel retail prices while an extended shortage of chips due to the
Russia-Ukraine war
has been hurting auto stocks. Jay Kale, Senior Vice President Research at Elara Capital shared his views.

In the uncertain global scenario, he would hedge his bets on domestic stories more, Kale said.

Global ancillary companies will be under a little bit more pressure till things are sorted out whereas the unknown variables are lesser in domestic exposed ancillary companies and original equipment manufacturers (OEMs), so one would want to prefer to be in that space in this uncertain scenario, he explained.

Also Read: Endurance Tech: War like situation will have lasting impact on industry

He likes domestic stories like Ashok Leyland, Maruti Suzuki India and Bajaj Auto which has exposure to the export side.

If there is any kind of signal of the Russia invasion of Ukraine getting sorted out, I think these global exposed ancillary companies will be the first one to outperform.

Also Read: Russia-Ukraine war highlights: US bans Russian oil and natural gas imports; UK says will phase out imports this year

The impact of geopolitical tension is felt in three key areas, one is on the margins, second is the demand momentum slowing down and third is the supply chain side of it, he said.

He believes higher fuel prices – because of rise in crude oil prices – will further dampen the demand sentiment in the auto sector.

For the full interview, watch the accompanying video

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