Rising oil prices may have impact on markets: G Chokkalingam

ET Now spoke to G Chokkalingam, Executive Director & Chief Investment Officer, Centrum Wealth Management, about oil price outlook.

How would you look at the market? Would you take money off the table because of the way this very important commodity is moving because crude at $100, NYMEX that I am talking about said that crude if it goes up higher would be the single biggest concern? Somehow the fund flows have seemingly ignored that completely?

Fundamentally yes, rising crude oil price can cause a problem. If it continues to rise and it stays at the higher level for next 2-3 months, definitely it is going to be a problem for the economy as well as for the stock market. But tactically if you see even in 2007 January, 2008 June, when the crude oil price almost rose by 100%, you would be surprised that the market was also quite steady. Almost one-third of the BSE 500 stocks went up by 20%. So the issue is that it is too early to get panic. You have to wait and observe what’s happening in Libya and yesterday media report that the rebels have taken control of oilfields and they have started selling oil to the western world. So if issue is resolved within a month or two, we do not have to worry about it and till that time, the best strategy in the market would be to play on stocks either they would be the beneficiary of rising oil price or they would remain unaffected by the rising oil price, so that is a precise strategy we have been following at our house.