Kotak Mahindra AMC, HDFC AMC, and Trust Mutual Fund are expecting a knee-jerk movement for Indian markets as geopolitical tensions escalated after the US attacked Iran's nuclear facilities unexpectedly.
However, experts believe that Indian markets' fundamentals remain strong due to domestic factors. Hence, investors should focus on their long-term goals and use any dip in the market for accumulating.
Take a look below to learn what experts have said about markets' movement:
Kotak Mahindra AMC's Nilesh Shah
Domestic factors support current valuation for long-term investors expecting moderate returns. Global factors from Trump policy to oil price and supply are boiling hot.
Market participants need to keep a watch on availability of oil as well as price. India has enough foreign exchange reserves to manage higher oil prices in double digits. Oil prices crossing triple digit or restricted supply will have an adverse impact on market. Traders should be extremely cautious. Investors should use correction as an opportunity to accumulate.
Navneet Munot, MD & CEO, HDFC AMC
The Iran-Israel conflict is witnessing a significant escalation and may induce further volatility in global markets. For Indian markets, while fundamentals remain strong, there could be a knee-jerk reaction led by global concerns.
However, India’s robust domestic demand, macroeconomic stability, and ongoing policy momentum provide resilience. Investors should avoid knee-jerk reactions, and stay aligned with their long-term goals. Diversification and asset allocation are key in navigating uncertain times.
Mihir Vora, CIO, Trust Mutual Fund
The escalation of conflict in the Persian Gulf can pose a risk to the global economy and markets by a spike in oil prices and difficulty in movement of goods through the Strait of Hormuz.
However, from the actions of the past few days, it is apparent that Israel and the US have control over the airspace and there seems to be extensive damage to Iran’s ability to counter-attack. So it may not be easy to disrupt the sea-traffic movement in the Gulf.
Moreover, given the sluggish global growth, the supply-demand situation for oil is not very tight. In the short term, oil prices can be moderated by release of oil from the strategic reserve of the US. As long as oil stays within the $65-85 range, India can manage the volatility. Only if it spikes to extreme levels like $100–$120, it can create problems.
The global liquidity, currency and interest rate scenario continues to be benign and financial conditions are getting increasingly benign.
On a stand alone basis, India is doing fine. Government spending has accelerated again, and there are green shoots in private sector investment. Rural demand seems to be picking up. Overall, earnings are coming through, liquidity is abundant, policy remains growth-focused and there is a sustained flow of domestic savings to the equity markets.
Indian financial markets have seen many such geopolitical events in the past 30 years and markets have emerged stronger. There will be short term volatility due to external factors, but that will not change the India story. Trust Mutual Fund remains bullish on domestic sectors including industrials, financials, selected consumer discretionary and healthcare.
Any knee-jerk reaction in the markets should be used as an opportunity to buy.
Mosaic Asset Management CEO & Co-Founder Maneesh Dangi
Market will see substantial impact in case oil supplies get hit. Purely from reaction function standpoint, Iran’ blockading of strait of Hormuz could be likely. Remember — Oil is the insider of geo-politics. Watch its price movement to gauge what awaits us in this conflict.
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