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Indian stocks pressured by higher interest rates but domestic demand intact: Tantallon

Tantallon Fund
Tantallon Fund6/18/2018 07:30 AM GMT+08  • 8 min read
Indian stocks pressured by higher interest rates but domestic demand intact: Tantallon
SINGAPORE (June 18): The Tantallon India Fund closed down -4.66% in May, after expenses. It has been a particularly difficult month for small and medium-sized companies that have been sold down rather indiscriminately — despite fundamentals on the groun
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SINGAPORE (June 18): The Tantallon India Fund closed down -4.66% in May, after expenses. It has been a particularly difficult month for small and medium-sized companies that have been sold down rather indiscriminately — despite fundamentals on the ground continuing to improve as evidenced by the strong GDP print, very positive corporate commentary and a very strong earnings season.

We would point specifically to (i) the spike in crude oil prices, and the implications of significantly higher energy prices for inflationary expectations and, therefore, for tightening monetary policy, and (ii) US dollar strength and the prospects of higher real interest rates as the primary catalysts for the heightened risk aversion setting the tone for markets broadly.

Our conviction stays intact: With the earnings cycle having inflected, we would urge investors to stay focused on the fundamentals, and to take advantage of the correction in valuations to invest intentionally in India’s transformative growth runway.

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