New Delhi, May 5 -- The global equity markets are not pricing in a severe downturn just yet because a covid-style shock looks unlikely, even as there is a risk of a mild recession in the US, according to Rig Karkhanis, head of global markets at Nomura.

Any progress on a US-China settlement could calm market nerves and potentially trigger a turnaround-especially in non-US markets, said Karkhanis. "I think regions like Europe and India could see a significant wave of inflows and investor interest in that scenario."

Karkhanis flagged some selling of US assets-both equities and debt-as investors begin shifting towards Europe, Japan and emerging markets (EMs), especially China after its fiscal stimulus announcement. He noted that while inflo...