Indian market mavens make contra call on Iran war impact

Key Highlights

• This, he said, could stabilize oil prices, as Iran potentially increases production in the near future.‘Swift end’?"If the war ends swiftly, things will be back in place; but if it gets protracted, there will be challenges," said Nilesh Shah, managing director, Kotak Mahindra AMC.
• Shah said investors should stick to their asset allocation discipline rather than sell in panic. The optimism runs counter to the caution among foreign institutional investors (FIIs) amid lingering global tariff uncertainty and disruptions led by artificial intelligence. The Nifty fell 1.25% to 25178.65 on Friday, after FIIs net sold Indian shares worth a provisional ₹7,536 crore, and increased net derivatives hedges by ₹3,583 crore to offset the risk of a fall on Monday.
• Of the ₹3,583 crore of extra index futures shorted on Friday, Nifty shorts accounted for ₹3,117 crore, with Bank Nifty accounting for the bulk of the remainder. Indian markets have fallen 4.5% from a record high of 26,373.2 on 5 January till Friday's closing, as FIIs sold ₹26,494 crore worth of equities in the cash market, based on depository and BSE data. Independent market analyst Ambareesh Baliga is on the side of optimists."The Iran-Israel tensions were the sticking point for regional stability, but now with the leader gone, chances of a new regime not inimical to the West have risen.
• Markets could begin discounting what might be good news," Baliga said. Lack of clarityHowever, HSBC pointed to the lack of clarity ahead.
• "We can have no conviction on how the situation in Iran may evolve following air strikes launched on Saturday, with the impact contingent on the duration of any conflict and how it extends to the broader region," its Global Investment Research team said in a note. Also Read | 'Pick broad market indices over themes for passive investing'"Oil market risk is asymmetrical regarding possible Iran scenarios, with Hormuz transit the main concern.