- The US announced a new blockade on the Strait of Hormuz, raising Iran conflict risks
- Crude oil prices surged above $100 per barrel amid market uncertainty
- Experts advise defensive investment strategies and higher cash reserves amid tensions
The announcement from the United States surrounding a new blockade on the Strait of Hormuz has added fresh uncertainty to the lingering Iran War, sending ripples through the market in the process, with crude prices once again breaching the $100 per barrel mark.
In the wake of the renewed uncertainty, markets experts such as Saurabh Mukherjea and Samir Vohra to profess defensive tactical shifts and higher cash reserves.
​Saurabh Mukherjea, Founder and CIO at Marcellus, believes the U.S. is strategically shifting the economic burden of the conflict onto other nations to force a resolution.
"Trump is upping the stakes. I think he's telling India, China, the whole world, that you now have to work with Iran and figure out a way to get Iran to surrender. If Brent moves towards 110, we'll give up the gains of last week," he said.
Mukherjea went on to suggest a highly defensive strategy, keeping in mind that the blockade may potentially drag the conflict in the Middle East.
"I think back home in India we continue to do what we've been doing over the last few months, which is try to use pharma stocks as one way to buffer ourselves from the pain... The second piece is IT looks to be a safe haven," he explained.
Globally, he recommended "loading up on markets in Europe and America on defense and aerospace companies."
​Mihir Vora, CIO of Trust Mutual Fund, agreed with the need for caution but warned against knee-jerk reactions.
"I wouldn't be buying in euphoria just because there's some announcement, and I wouldn't be selling in a panic because things are still fluid. I don't think it's the timing that matters here or the levels that matter. It's just the length of the uncertainty that is going to matter."
​To navigate this uncertainty, Vora has significantly increased his fund's liquidity. "Normally we keep about 3 to 5% cash. This time around we are closer to 8-9%," he revealed.
​However, Vora views IT and pharma purely as temporary hiding places rather than long-term structural calls.
"As and when things recover, I think the sharpest recoveries will be in the domestic cyclicals, will be in the usual India stories. And so that's what we are positioning for," he concluded.
ALSO READ: US To Begin Blockade Of Iranian Ports From Monday As Strait Of Hormuz Peace Talks Collapse
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