Global and domestic growth expectations are likely to be downgraded following US President Donald Trump's address on Thursday and corporate earnings estimates could also face cuts, Mihir Vora, chief investment officer at TRUST AMC told NDTV Profit in a televised interview.
Trump said strikes on Iran will continue for at least two-three weeks to further erode the country's military and nuclear capabilities, plunging stock markets across Asia and sending oil prices higher.
Vora warned that the longer the Strait of Hormuz remains shut, the more severe the impact would be, particularly for Asia and India. Energy imports from the Persian Gulf region have been curtailed due to the Iranian blockade of the narrow strait. Trump suggested importers buy American oil and shirked any responsibility for the US to secure the strait.
ALSO READ: Trump Offers American Oil To Countries Hit With Hormuz Blockade, But With A Message
According to Vora, the bigger concern lies with disruptions to gas supplies, as these are harder to replace through alternative sources. "We may see stress emerging in smaller businesses."
The fund manager emphasised the need for proactive government measures to ease concerns of foreign portfolio investors and encourage foreign direct investment, noting that attracting foreign inflows is crucial to support markets and economic growth during such periods.
He flagged continuous FPI selling as a worrying sign and said the government should step in. Overseas funds have dumped stocks worth Rs 1.3 lakh crore so far this year, with March outflows at Rs 1.2 lakh crore.
On the investment front, Vora pointed to pockets of defensive growth in sectors such as pharmaceuticals, information technology, defence, power transmission and distribution, power generation, and renewables, while adding that commodities could present a tactical opportunity.
ALSO READ: Jefferies Prefers SBI, HDFC Bank, Axis Bank; Check Nifty Target
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.