“Absolutely. So, the world is kind of now investing a lot in the commodity as a theme,” Banerjee said, pointing to strong performance across base metals and rising inflation in agricultural commodities. He expects this trend to continue, especially in base metals, where supply constraints remain a key driver.
Copper, zinc and aluminium are among the metals Banerjee is watching closely. He said copper has an additional support from the tariff story expected to play out next year, while zinc and aluminium are facing supply disruptions. The situation around the Strait of Hormuz could further affect the metals and energy markets.
The broader commodity strength comes as the oil market also faces tightening supply conditions. Banerjee said inventories that had helped keep prices stable since March are now being drawn down, while disruptions through Hormuz and the Red Sea are adding pressure. He expects Brent crude to move towards $110 a barrel in the short term, with $110-$115 possible if Hormuz flows do not normalise.
For India, higher oil prices could put pressure on the rupee and the current account deficit. Banerjee expects the rupee could move towards 86-86.5 per dollar, where he believes the Reserve Bank of India (RBI) would become more aggressive in intervening. He also noted that foreign portfolio investor (FPI) flows, which were positive in the previous two months, have turned negative in September.
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Within precious metals, Banerjee is more positive on silver than gold. He sees $66 per ounce as a strong base for silver and expects it to reach $71 per ounce over the next few weeks, although elevated US real yields could continue to limit gains in gold and silver.
“It’s going to continue to outperform gold,” Banerjee said of silver.
