ETMarkets Smart Talk: Israel-Hamas conflict could result in long term inflationary headwind: Naveen Kulkarni

economictimes.indiatimes.com:

“Geopolitical events tend to have long-term consequences. However, these challenges are difficult to quantify for the equity markets,” says Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.

In an interview with ETMarkets, Kulkarni said: “More often than not, these challenges eventually manifest in the form of higher inflation, say higher crude oil prices, in this instant” Edited excerpts:

October is turning out to be a roller coaster ride for investors in equity markets. Will geopolitical concerns have a long-term impact on equity markets if things escalate?
Geopolitical events tend to have long-term consequences. However, these challenges are difficult to quantify for the equity markets.

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More often than not, these challenges eventually manifest in the form of higher inflation, say higher crude oil prices, in this instant.

Thus, the crude oil price vector will be the most critical parameter to gauge the long-term impact. If things escalate, they will invariably manifest into higher long-term inflationary headwinds.

At present, the chances of severe escalation seem a little remote. However, geopolitical events continue to remain challenging to predict.

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