Latest news with #AlokAgarwal
Time of India
11-07-2025
- Business
- Time of India
Use market dips to build portfolios; these 8 sectors have high growth potential: Alok Agarwal
Alok Agarwal , Head, Quant & Fund Manager, Alchemy Capital Management , emphasizes India's strong structural growth, advising against market timing due to unpredictable corrections. He suggests that market dips present opportunities to build portfolios and advocates for continuous investment in quality stocks and promising funds. Sectors like consumer discretionary, financial services, healthcare, real estate, electronics, industrials, defence, and power are highlighted for their high growth potential. What is your view on IT and pharma in the light of what is happening in the US? We do not know whether there is a deal or not? Alok Agarwal: IT has been under the cloud of not so high growth. With the advent of AI, there is always a question of whether it will impact growth or margins, plus the implied issues in the US itself which is the main market area for IT companies. All that has put growth numbers for IT companies under cloud. Even in the last 5-10 years, the combined growth number of the IT sector was not that great while going forward, there seems to be more headwinds than tailwinds. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like War Thunder - Register now for free and play against over 75 Million real Players War Thunder Play Now Undo That is for the sector as a whole, but some select players would emerge with better outcomes because of their individual strengths. As a whole, the sector lacks the growth that can propel it further and that is why the stance is not very positive in IT. When it comes to pharma, there are multiple types; there is generic pharma from Indian companies who sell in the US. We also have CDMO players in India who play a very crucial role. We also have domestic pharma and the hospital businesses. So, we are more positive and constructive on the CDMO players and also, very positive on the domestic hospitals. Those areas are growing much better and have much better visibility as well and that is what drives our positivity out there. One thing with Alchemy Capital is the focus is on identifying overheated sectors using the PEG ratio. Another debate which the market participants have in their mind is whether to be with the benchmarks or to shift focus to the broader markets. What is your view over there? Alok Agarwal: More than focusing on whether we are with or without benchmark, as a House, we believe in GARP investing which is growth at reasonable price and growth is the first word of that acronym itself. Our country grows at around 11 odd percent in terms of nominal GDP and the corporate earnings are growing somewhere in the vicinity of 13% to 14%. We would want to look at companies that are growing faster than that growth rate. And that is the number we usually look at. So, growing at faster than the overall economy and the overall corporate earnings. Live Events You Might Also Like: Nifty 50 companies grew only 3.5% last quarter, next 450 companies grew over 20%: Alok Agarwal If you want to have growth plus good quality on both balance sheet and the management side, you have to pay some premium and that can be judged through the PEG ratios. We believe that a PEG ratio lower than the index, is a little more reasonable for the kind of premium that we pay. Currently as we see, we were talking about some of the index heavyweights in terms of sectors. They are the ones that are driving down the overall growth numbers. So, the majority of the growth is seen in some of those sectors that are not adequately represented in the benchmarks and that is why the answer may look like finding opportunities outside the benchmark. But our outlook is not to look at with or without benchmark, outlook is to look at companies that are growing much better, much faster on a more sustainable basis. How do you advise clients currently to navigate the market? Are you advising them to sit on cash because there is some uncertainty and the earning season is kicking off from Thursday? Will you advise to wait and watch till some signs emerge or there are some sectors that one can invest in right now? If yes, which can be those top three sectors? Alok Agarwal: In India, it is a structural growth story. We can never really time the markets. How would we have judged from September end- October till February – five months of correction that happened for the first time in over 25 years? At the end of February, it was so difficult to even imagine that in the next four months, markets could bounce back the way they did. The fact is that India is a structural growth story and any dip is actually an added opportunity to build up the portfolios. So, there is no point waiting. Legendary investor Charlie Munger had said that big money is not in buying or selling, it is in the waiting. So, I would say that one should be invested at most of the times and ensure that they are invested. If they are going through the funds side, then invest in the right funds; if they are investing in the stocks, it should be in those companies which are growing at a reasonable pace. As long as that is there, you are in reasonably good quality stocks, the stocks itself will ensure that things go up. You Might Also Like: Investors going back to basics; looking at manufacturers, PSUs: Pashupati Advani As for sectors that are growing much faster, we are more positive on consumer discretionary space and within that, spaces like jewellery, retail, financial services on the capital market plays or on the hospital side, the real estate side, the electronic manufacturing and the industrial side. We are also more positive on the defence and the power. These are the areas that are growing at a much faster pace that drives our positive view there. You Might Also Like: Spot government spending trends to position your portfolio: Gurmeet Chadha
Time of India
11-07-2025
- Business
- Time of India
Nifty 50 companies grew only 3.5% last quarter, next 450 companies grew over 20%: Alok Agarwal
Alok Agarwal , Head, Quant & Fund Manager, Alchemy Capital Management , highlights a divergence in market growth. Nifty 500 firms saw approximately 11% growth last quarter. However, Nifty 50 companies only grew by 3.5%. Smaller companies showed more robust growth. Index heavyweights like oil, FMCG, banking, and tech are lagging. Sectors like electronics, real estate, and building materials are performing well. These sectors are underrepresented in major indices. You must have noticed on the expiry day that there was not much movement in the Nifty. I do not know what will happen in the second half of the market, but most of the investors remain confused because of what is happening globally and also the kind of volatile environment that has been there. On one day, the market is in green, the next day, it is in the red territory. There is limited movement in the market currently. What is your assessment of Sensex and Nifty and also is there any specific churning that you are seeing currently? Alok Agarwal: As you rightly pointed the volatility has definitely gone up in the last few weeks and months, but frankly as investors, given the kind of events these markets have witnessed in the last few months, we cannot really be complaining. The previous quarter started off with the tariff announcements in the US; then came the fatal attack in Pahalgam leading to an almost war-like situation between India and Pakistan. Then came the Iran-Israel conflict. So many things happened in that quarter and the markets, despite some volatility, kept moving upwards. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Bank-Repossessed Cars in the Philippines at Bargain Prices! SUV Deals | Search Ads Search Now Undo As investors, it is difficult to see that kind of bounce back and resilience in the markets. Fundamentally, as well, the macro numbers have been improving – be it on the actions taken by the RBI wherein they have cut the repo rates, the CRR, ensured that the system liquidity went from a deficit to a surplus, and also the capex numbers being undertaken by the government and control on the fiscal discipline. All these factors are coming together and now GST collection numbers have improved and the corporate earnings numbers are also improving. So, things are shaping up pretty well. Yes, we are living in a world with a lot of things happening both globally and locally and hence slightly higher volatility is the price that one is paying. But markets on the whole look resilient and reasonably strong for that kind of situation. I agree that we cannot complain more and the domestic markets are behaving very maturely to all of the global scenarios and contingent uncertainties that are coming in, but we cannot negate the fact that markets are in a pause mode at present and are looking for direction. Will the uncertainties weigh more or will the earnings season give the direction which the market needs and if yes, what are the sectors one should watch out for? The earning season starts with an IT major posting its results today. Which sectors are on your radar? Alok Agarwal: We are very interestingly positioned. Despite the global and local developments, we are more constructive. But the interesting development that is happening in the markets is that even if we look at the previous quarter's numbers, the Nifty 500 companies grew in the vicinity of 11 odd percent, but the Nifty 50 companies grew at only 3.5%. The bottom 450 companies actually grew at around 20% plus. Live Events You Might Also Like: Get into mid and smallcaps with a slightly longer-term horizon compared to largecaps: Harsha Upadhyaya What I am trying to imply is that some of the index heavyweight sectors are the ones that are seeing the slowdown in the earnings growth and that is bringing down the aggregate numbers. Some of the sectors that are growing better, are not adequately represented in the indices, the electronic manufacturing companies, the companies on some of the real estate, some of the capital market plays, some of the NBFCs on the non- lending side as well as the lending space. Also companies in building material space like cement, and hospitals and to an extent on the tourism side, are not adequately represented in the main indices but are showing handsome growth. On the other hand, index heavyweights, the likes of oil and gas, FMCG, banking, and technology companies are not growing at a faster pace. You Might Also Like: Betting on consumption? Put 70-75% in discretionary & 20-30% in staples: Gurmeet Chadha Investors going back to basics; looking at manufacturers, PSUs: Pashupati Advani
Time of India
25-06-2025
- Business
- Time of India
ETMarkets Smart Talk: Sectors to watch in 2H2025 - Defence, Real Estate, Aviation, says Alok Agarwal
In this edition of ETMarkets Smart Talk, we catch up with Alok Agarwal , Head – Quant and Fund Manager at Alchemy Capital Management, to discuss the sectoral outlook for the second half of 2025. Amid improving macro stability, robust earnings momentum, and supportive monetary policy, Agarwal believes India is entering a favourable phase for select high-growth sectors . by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo He highlights defence , real estate , aviation , electronic manufacturing, and capital markets as the key themes likely to outperform in 2H2025. With nominal GDP growth expected to remain in double digits and structural reforms in play, these sectors are well-positioned to deliver earnings well above market averages. Edited Excerpts – Q) June is turning out to be a volatile month for D-Street. How is 2H2025 likely to pan out for Indian markets? Do you think most of the negatives are behind us? Live Events A) June 2025 has been a volatile month, with the Indian stock market experiencing significant fluctuations, led by the global uncertainties, such as the Iran-Israel war, the US trade policies and inflation fears. The FPI flows have been marginally negative too. However, in our view, the outlook for the second half of 2025 (2H2025) leans towards recovery. The recently concluded Q4FY25 earnings season was fairly strong with Nifty 500 reporting an aggregate growth of over 11% YoY, and Nifty 500 ex-Nifty 50 reporting growth of over 20% YoY. Corporate earnings momentum remains intact, macro stability is improving, and liquidity conditions are supportive. The corporate earnings to GDP ratio is now at a 17-year high, the GST collection growth in May 2025 was the highest since October 2022, the inflation is at over a six-year low, and the RBI has been proactively supportive of growth and liquidity. The RBI's 50 basis points (bps) repo rate cut on June 6, 2025, to 5.5% is a significant catalyst, reducing borrowing costs and stimulating economic activity. Plus, the CRR (Cash Reserve Ratio) has been cut to a record low level of 3.0%. In our view, the bulk of the negatives are priced in. However, we would be closely following the Iran-Israel war too for any unexpected escalation and its impact on crude oil. Q) What does 50 bps cut mean for equity and bond markets? What should be an asset allocation strategy? A) The RBI's 50 bps repo rate cut is a pivotal move to support growth amid low inflation (2.8% in May 2025 – lowest since February 2019). Falling inflation and rates are positive for both the equity and bond markets. For equity markets, lower interest rates reduce borrowing costs, encouraging investment and consumption, which can boost corporate earnings and stock prices. Sectors like real estate, infrastructure, and consumer durables are direct beneficiaries of the rate cut, reducing funding costs for banks and stimulating lending. Moreover, falling rates are also positive for valuations. For bond markets, the rate cut leads to higher bond prices and lower yields, making bonds more attractive for income-seeking investors. The accompanying 100 bps cut in the Cash Reserve Ratio (CRR) to 3%, releasing ₹2.5 lakh crore in liquidity further supports bond markets. The policy's stance has shifted to 'neutral,' suggesting the easing cycle may pause, however, the immediate impact is positive for both asset classes. While we do see a longer runway of growth for equity and limited room for further rate cuts, yet for asset allocation, individual risk-reward requirements could be quite different and hence one should reach out to their investment/financial advisors. At Alchemy, we are positive on equity and do expect a prolonged period of double-digit nominal GDP growth in India. Q) What is your take on Q4 earnings from India Inc.? Any hits and misses which you tracked in the results? A) The aggregate of Nifty 500 Index companies showed a YoY growth of 11.9% in the net profits, higher than estimates of just touching double digits. The break-up is even more interesting: Agencies As evident from the above table, the Nifty 50 earnings were a drag on the overall numbers. The broader markets, including the Nifty Next 50, grew at a healthy pace with operating profit growing at 14% YoY and net profit at over 22% YoY. Index heavyweight sectors saw sluggish growth. Oil & gas -4% YoY, private banks -3% YoY, consumer 4% YoY, technology 3% YoY. However, with the economic numbers rebounding, the GST collections improving, and multi-year low inflation and rates, the outlook is much brighter. Q) Nifty Bank hit a record high in June which suggests that there is a lot of interest in banking stocks. What is fuelling the rally in financials – is it the rate cut by RBI? A) Falling inflation and hence falling interest rates are good for lenders as they reduce funding costs and stimulate lending. Healthy Q4FY25 earnings, with banks performing well despite margin pressures, also contributed to the Nifty Bank's rally. The sector's resilience, supported by the RBI's easing cycle, reflects investor confidence. The protected margins and strong control over credit costs are aiding the strength. With inflation at over six-year lows and CRR at record low, there is limited room for more easing via rates and CRR by the RBI. However, the bank loan growth has fallen to a three-year low of 9.8% YoY (for the fortnight ended May 23, 2025) and deposit growth is also struggling near a two-year low of 10%. When the RBI cut rates, it was a choice between growth and margins for the banks. Few banks chose to protect margins and cut deposit rates, while others have maintained. It will be interesting to see who wins the battle to mobilise deposits. Q) Which sectors are likely to remain in limelight in the 2H2025? A) For 2H2025, several sectors are expected to remain in the limelight, driven by India's structural growth story and policy support. The sectors that have been growing well include Industrials (led by defence, power), electronic manufacturing companies, capital market plays (exchanges, intermediaries, brokers, AMCs, wealth managers), hospitals, hotels, aviation, real estate and cement. In a scenario where nominal GDP is expected to be just over double digits, and top index heavy weight sectors' profit growth is struggling to match the nominal GDP growth, the above-mentioned sectors have been reporting profit growth well in excess of nominal GDP growth and more importantly, consensus estimates point towards continued higher growth. Q) The tonality keeps changing from the US when it comes to 'Trade Talks'. Do you think it is still a relevant headwind for equity markets across the globe? A) US trade talks, particularly with China, have seen fluctuations, with recent discussions in London in early June 2025 resulting in a framework agreement. The deal aims to ease tariffs and export controls, but its durability is uncertain, offering little resolution to deeper issues. Market reactions have been cautious, with mixed global sentiments, reflecting ongoing uncertainty. For India, while direct impact is limited, global economic conditions and FPI flows are affected, keeping trade talks a relevant headwind, though the impact value has substantially reduced. Q) China equity markets are up in double digits while we have underperformed most EM peers. Does it make a case for global diversification? A) In USD terms, China's Shanghai Composite Index has delivered 2.7% returns so far this year, compared Nifty 50 Index's 4.1%. While India's index corrected more sharply earlier in the year, the recovery has been sharper too. India has rare combination of: Falling dependency ratio for the last 30 years and likely to continue for another 20 years Double-digit nominal GDP growth Double-digit corporate earnings growth Double-digit corporate ROE Over 500 companies with $1bn plus market cap Diversified market with good depth across sectors Per capita income at inflexion point of $2500 Shorter term, notwithstanding, India is set to outperform the world and its neighbours, in our view. While diversification always makes sense, the better diversification would be an EM (emerging market) basket as compared to a DM (developed market) basket. Q) Which sector(s) is/are looking overheated and why? A) Overheated is a relative term. A sector that grows at a fast pace or expected to grow at a fast pace cannot be really compared with the one which is struggling for growth. Same goes with valuations – PEG (price/earnings to growth) ratios throw more light on reasonableness of valuation as compared to PE alone. BSE 500 Index trades at a one-year forward PE of 22x and next two years earnings growth is estimated to be at 10%. This translates into a PEG ratio of 2.2x. As a house, our investment framework is built around GARP methodology, which favours Growth at Reasonable Price. Ideally, if the growth is above market and the PEG is below market, its preferred. But the sectors that have run up, where estimated growth could be lower than market growth and PEG is quite high compared to market – are the sectors which we find overheated. In our view, these include oil & gas, FMCG, IT and select banks.
Economic Times
25-06-2025
- Business
- Economic Times
ETMarkets Smart Talk: Sectors to watch in 2H2025 - Defence, Real Estate, Aviation, says Alok Agarwal
In this edition of ETMarkets Smart Talk, we catch up with Alok Agarwal, Head – Quant and Fund Manager at Alchemy Capital Management, to discuss the sectoral outlook for the second half of 2025. ADVERTISEMENT Amid improving macro stability, robust earnings momentum, and supportive monetary policy, Agarwal believes India is entering a favourable phase for select high-growth sectors. He highlights defence, real estate, aviation, electronic manufacturing, and capital markets as the key themes likely to outperform in 2H2025. With nominal GDP growth expected to remain in double digits and structural reforms in play, these sectors are well-positioned to deliver earnings well above market averages. Edited Excerpts – Q) June is turning out to be a volatile month for D-Street. How is 2H2025 likely to pan out for Indian markets? Do you think most of the negatives are behind us? A) June 2025 has been a volatile month, with the Indian stock market experiencing significant fluctuations, led by the global uncertainties, such as the Iran-Israel war, the US trade policies and inflation fears. The FPI flows have been marginally negative too. ADVERTISEMENT However, in our view, the outlook for the second half of 2025 (2H2025) leans towards recovery. The recently concluded Q4FY25 earnings season was fairly strong with Nifty 500 reporting an aggregate growth of over 11% YoY, and Nifty 500 ex-Nifty 50 reporting growth of over 20% earnings momentum remains intact, macro stability is improving, and liquidity conditions are supportive. ADVERTISEMENT The corporate earnings to GDP ratio is now at a 17-year high, the GST collection growth in May 2025 was the highest since October 2022, the inflation is at over a six-year low, and the RBI has been proactively supportive of growth and RBI's 50 basis points (bps) repo rate cut on June 6, 2025, to 5.5% is a significant catalyst, reducing borrowing costs and stimulating economic activity. Plus, the CRR (Cash Reserve Ratio) has been cut to a record low level of 3.0%. ADVERTISEMENT In our view, the bulk of the negatives are priced in. However, we would be closely following the Iran-Israel war too for any unexpected escalation and its impact on crude oil. Q) What does 50 bps cut mean for equity and bond markets? What should be an asset allocation strategy? A) The RBI's 50 bps repo rate cut is a pivotal move to support growth amid low inflation (2.8% in May 2025 – lowest since February 2019). ADVERTISEMENT Falling inflation and rates are positive for both the equity and bond markets. For equity markets, lower interest rates reduce borrowing costs, encouraging investment and consumption, which can boost corporate earnings and stock like real estate, infrastructure, and consumer durables are direct beneficiaries of the rate cut, reducing funding costs for banks and stimulating lending. Moreover, falling rates are also positive for bond markets, the rate cut leads to higher bond prices and lower yields, making bonds more attractive for income-seeking investors. The accompanying 100 bps cut in the Cash Reserve Ratio (CRR) to 3%, releasing ₹2.5 lakh crore in liquidity further supports bond policy's stance has shifted to 'neutral,' suggesting the easing cycle may pause, however, the immediate impact is positive for both asset we do see a longer runway of growth for equity and limited room for further rate cuts, yet for asset allocation, individual risk-reward requirements could be quite different and hence one should reach out to their investment/financial Alchemy, we are positive on equity and do expect a prolonged period of double-digit nominal GDP growth in India. Q) What is your take on Q4 earnings from India Inc.? Any hits and misses which you tracked in the results? A) The aggregate of Nifty 500 Index companies showed a YoY growth of 11.9% in the net profits, higher than estimates of just touching double digits. The break-up is even more interesting:As evident from the above table, the Nifty 50 earnings were a drag on the overall numbers. The broader markets, including the Nifty Next 50, grew at a healthy pace with operating profit growing at 14% YoY and net profit at over 22% heavyweight sectors saw sluggish growth. Oil & gas -4% YoY, private banks -3% YoY, consumer 4% YoY, technology 3% YoY. However, with the economic numbers rebounding, the GST collections improving, and multi-year low inflation and rates, the outlook is much brighter. Q) Nifty Bank hit a record high in June which suggests that there is a lot of interest in banking stocks. What is fuelling the rally in financials – is it the rate cut by RBI? A) Falling inflation and hence falling interest rates are good for lenders as they reduce funding costs and stimulate lending. Healthy Q4FY25 earnings, with banks performing well despite margin pressures, also contributed to the Nifty Bank's sector's resilience, supported by the RBI's easing cycle, reflects investor confidence. The protected margins and strong control over credit costs are aiding the inflation at over six-year lows and CRR at record low, there is limited room for more easing via rates and CRR by the the bank loan growth has fallen to a three-year low of 9.8% YoY (for the fortnight ended May 23, 2025) and deposit growth is also struggling near a two-year low of 10%. When the RBI cut rates, it was a choice between growth and margins for the banks chose to protect margins and cut deposit rates, while others have maintained. It will be interesting to see who wins the battle to mobilise deposits. Q) Which sectors are likely to remain in limelight in the 2H2025? A) For 2H2025, several sectors are expected to remain in the limelight, driven by India's structural growth story and policy support. The sectors that have been growing well include Industrials (led by defence, power), electronic manufacturing companies, capital market plays (exchanges, intermediaries, brokers, AMCs, wealth managers), hospitals, hotels, aviation, real estate and cement. In a scenario where nominal GDP is expected to be just over double digits, and top index heavy weight sectors' profit growth is struggling to match the nominal GDP growth, the above-mentioned sectors have been reporting profit growth well in excess of nominal GDP growth and more importantly, consensus estimates point towards continued higher growth. Q) The tonality keeps changing from the US when it comes to 'Trade Talks'. Do you think it is still a relevant headwind for equity markets across the globe? A) US trade talks, particularly with China, have seen fluctuations, with recent discussions in London in early June 2025 resulting in a framework deal aims to ease tariffs and export controls, but its durability is uncertain, offering little resolution to deeper issues. Market reactions have been cautious, with mixed global sentiments, reflecting ongoing India, while direct impact is limited, global economic conditions and FPI flows are affected, keeping trade talks a relevant headwind, though the impact value has substantially reduced. Q) China equity markets are up in double digits while we have underperformed most EM peers. Does it make a case for global diversification? A) In USD terms, China's Shanghai Composite Index has delivered 2.7% returns so far this year, compared Nifty 50 Index's 4.1%. While India's index corrected more sharply earlier in the year, the recovery has been sharper has rare combination of:Falling dependency ratio for the last 30 years and likely to continue for another 20 yearsDouble-digit nominal GDP growthDouble-digit corporate earnings growthDouble-digit corporate ROEOver 500 companies with $1bn plus market capDiversified market with good depth across sectorsPer capita income at inflexion point of $2500Shorter term, notwithstanding, India is set to outperform the world and its neighbours, in our diversification always makes sense, the better diversification would be an EM (emerging market) basket as compared to a DM (developed market) basket. Q) Which sector(s) is/are looking overheated and why? A) Overheated is a relative term. A sector that grows at a fast pace or expected to grow at a fast pace cannot be really compared with the one which is struggling for goes with valuations – PEG (price/earnings to growth) ratios throw more light on reasonableness of valuation as compared to PE 500 Index trades at a one-year forward PE of 22x and next two years earnings growth is estimated to be at 10%. This translates into a PEG ratio of 2.2x. As a house, our investment framework is built around GARP methodology, which favours Growth at Reasonable Price. Ideally, if the growth is above market and the PEG is below market, its preferred. But the sectors that have run up, where estimated growth could be lower than market growth and PEG is quite high compared to market – are the sectors which we find overheated. In our view, these include oil & gas, FMCG, IT and select banks. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Mint
22-06-2025
- Business
- Mint
Markets poised for a near-term dip, crude can worsen the sentiment
US President Donald Trump announced that Washington has carried out strikes on three nuclear facilities in Iran, marking a direct involvement in the campaign initiated by Israel last week to dismantle Iran's nuclear infrastructure. Since the war started two weeks ago, the Nifty 50 and the Sensex 30 index have gained 1.59%. At the same time, crude oil prices have gained 2.19% to $76.57 per barrel. The US has long been watchful about Iran's expanding nuclear programme, with tensions rising especially a couple of years ago when Iran's uranium enrichment neared 83.7% (very close to weapons-grade, 90% enrichment), said Alok Agarwal, head-Quant and Fund Manager at Alchemy Capital Management. 'This concern has now escalated to the point of direct US military action, making the situation more volatile, in our view," he added. Read more: US strike on Iran raises oil shock, capital flow risks for India's economy From an Indian investment perspective, the primary concern isn't just the geopolitical tension itself—which mostly affects market sentiment—but the potential surge in crude oil prices, which would have a direct economic impact, Agarwal added. Moreover, a sharp spike—especially beyond the $100/barrel mark—would be a major concern for Indian markets, as India imports over 80% of its crude requirements. Crude price impact Aniruddha Sarkar, CIO at Quest Investment Advisors, said that the key concern for the market is the impact of rising crude prices, which could widen the current account deficit, fuel inflation, and weaken the rupee due to higher forex outflows owing to a higher fuel bill and foreign institutional investors (FII) selling in risk-off mode from emerging markets. The second stage impact, which could happen if the war persists for long, would be on sectors like oil marketing companies (OMCs), paints, and aviation, which could face cost pressures and perform negatively as crude prices climb, Sarkar added. However, he said that these impacts could remain short-lived as the war may not continue for a long time. While other experts believe that no further retaliation by Iran might actually lead to an upside in the Indian markets. "If Iran doesn't retaliate in a way that is surprising or nasty, markets could actually rally as investors reckon the tensions would abate, but if there are attacks on the Strait of Hormuz or on US bases, tensions could actually escalate and all bets would be off the table," said Nirmal Bhanwarlal Jain, founder of IIFL Group and managing director at IIFL Finance. Anthony Heredia, MD & CEO, Mahindra Manulife Investment Managers, said, 'If there is no escalatory move from Iran now or over the next few days, you may actually see positivity extending as in a risk-on market environment, people anecdotally find reasons to be optimistic rather than the other way around." Taking advantage Markets have shown remarkable resilience so far in the face of international skirmishes and tariff threats, and if there could be further escalation of tensions in the coming weeks if Iran were to retaliate, investors would do well to keep the powder dry to take advantage of any market correction, said Sandeep Bagla, CEO, TRUST Mutual Fund. Read more: Mint Explainer | Strait of Hormuz: Will Iran shut the vital oil artery of the world? George Thomas, fund manager at Quantum Mutual Fund, said that in the coming few days, markets are expected to be very volatile. Hence, investors should invest in a staggered manner, as it helps average out the cost and reduces risk. The India VIX index has fallen 9.13% since 13 June, when the war started. From a technical standpoint, the prolonged phase of consolidation has notably impacted key indicators, said Sudeep Shah, deputy vice president, head - Technical & Derivatives Research at SBI Securities. 'The upward slope of the short and medium-term moving averages has slowed down, reflecting a loss of momentum. Simultaneously, the daily RSI (Relative Strength Index) continues to move sideways, in line with the RSI range shift concept that suggests a lack of directional bias. Further, the trend strength indicator – ADX (Average Directional Index), is currently quoting near the 13 level, which was the lowest level since July 2024, which shows a lack of strength in either direction," Shah added. Shah added that the zone of 24,880-24,850 will act as immediate support for the Nifty 50 index. While on the upside, the zone of 25,200-25,250 will act as a crucial hurdle for the index, he said. However, India is in a better place than other times when there has been tension, experts say. 'While we find ourselves in a more inflationary than disinflationary environment, India has never been in a better place than it is now to handle the repercussions of the latest round of tensions," said Kenneth Andrade, founder and CIO of Old Bridge Capital Management. Even the Asian indices closed higher on Friday. The Hang Seng index closed 1.29% higher, the Kospi index closed 1.48% higher, and the CSI 300 index ended 0.09% higher. Where's oil headed? Under the severe outcome, oil prices could surge to $120-130 per barrel if the Strait of Hormuz is closed or there is a general Middle East conflagration, which could ignite retaliatory responses from major oil-producing countries, said JP Morgan in a report on 12 June. Concerns are that if Iran closes the Strait of Hormuz, the global oil supply will be disrupted, which in turn will cause a rally in oil prices. Read more: Donald Trump's war dilemma: Should America put boots on the ground in Iran or not? However, historically, Iran has never fully closed the Strait of Hormuz, even during major conflicts like the Iran-Iraq War (1980-1988), the rise in US-Iran tensions after 2011, or the fallout from the Iran nuclear deal (2018-2020). Experts say that this is because doing so would hurt Iran more than help it. About 20% of the world's oil passes through the Strait of Hormuz, which is also a key path for liquefied natural gas exports, especially from Qatar, one of the biggest suppliers. 'US naval forces in the Persian Gulf act as a strong military deterrent, and any closure attempt by Iran would risk severe retaliation," said Yes Institutional Equities in a report dated 18 June. It further added that Iran depends heavily on the Strait for its own oil exports and critical imports, making a blockade counterproductive. 'Moreover, shutting the Strait would harm regional allies like Qatar and Iraq, who also rely on the waterway, potentially straining Iran's strategic relationships. It would also violate international maritime law, further isolating Iran diplomatically," Yes Institutional Equities said. Hence, experts say that Iran has often used the threat of closing the Strait as a political tool to gain leverage in talks—without actually going through with it.
