Gold price slump likely to strengthen bias towards equity markets: Badrish Kulhalli, HDFC Life

In a chat with ET Now, Badrish Kulhalli, Fund Manager, Fixed Income, HDFC Life, shares his macroeconomic outlook in the light of recent events. Excerpts:

ET Now: Things look good on the macro front — positive news on GST, low commodity prices, Greek trouble subsiding, Iran deal done. Gold prices are down too. Should we celebrate, or will that be premature?

Badrish Kulhalli: I do not think the celebration will be premature. All these concerns seem to be sorting themselves out in a positive way. It will make for a good outcome for India.

We expect the pick-up in monsoons to bridge the rainfall gap. Last weekend, the Met department said that the deficiency was around 8%. Looking at the improvement in the rains, I would think deficiency should reduce, at least in the western region. As we get more data on monsoon pick-up, the last piece of the macro picture will start improving.

Things are definitely improving, and the markets are also reflecting this change. As you said, the Greece issue has not affected the markets. The Iran deal is through, which will have a positive impact on oil prices. We have seen the initial impact already. As Iran's improving physical infra will allow pumping of more oil, I think oil prices will stay low.

Gold prices coming down should reduce investment demand for gold. Besides, because equity markets are doing better, there should be a shift from physical savings (gold/property) towards financial savings (equity as well as bank deposits).

So, things are definitely moving in the right direction. Markets are reflecting that too.