Why is this geopolitical episode impacting Indian markets more than past events?
Markets have recovered from past crises and will likely do so again. The key difference this time is not just higher oil prices but also supply disruptions due to issues around the Strait of Hormuz. There’s also constant, uncertain news flow, which keeps sentiment volatile. That said, markets are gradually stabilising and beginning to take this in stride.
From an investor’s perspective, is this mainly an oil story, a rupee issue, or a broader risk-off trend?
It’s a combination. This comes after 18 months of underperformance by Indian markets versus global peers. Earlier, high valuations, slowing growth, weak earnings, and global shifts toward tech-heavy markets led to FPI outflows. Just as things were improving—growth picking up, earnings recovering, and policy support kicking in—this conflict hit. Oil prices, currency pressure, and risk-off sentiment are all interconnected here.
What could break this cycle of pressure on markets?
De-escalation of the conflict is key. If tensions ease, crude prices could fall by $20–25, which would significantly improve sentiment. In fact, I believe nearly 90% of the current risks are already priced in, making the risk-reward favourable from here.
With heavy FPI outflows, can domestic investors continue to support markets?
Domestic investors have shown strong resilience and continue to invest with a long-term view. SIP flows and investor confidence remain intact. While FPI selling has been heavy, India’s fundamentals—strong GDP growth, improving earnings outlook, and attractive valuations—should eventually bring foreign investors back.
What is your outlook on India amid all this uncertainty?
Despite current challenges, India remains the fastest-growing large economy with over 6.5% GDP growth. Valuations have corrected, and India’s weight in global portfolios is at a decade low. As growth and earnings recover, both domestic and foreign investors are likely to increase exposure again.
