Indian equity markets are likely to open sharply lower after Donald Trump announced a blockade of the Strait of Hormuz, pushing investors into a risk-off mode amid the escalating West Asia War
Representational image. File pic
Indian equity indices are set for a significant correction at the opening bell following President Trump's announcement of a naval blockade on the Strait of Hormuz.
The escalation amid the concerning global situation comes after the collapse of negotiations, pushing market sentiment into a cautious "risk-off" zone as domestic investors weigh the impact of surging energy costs.
As reported by news agency ANI, investors are advised to avoid attempting to time the market volatility. "Not the time to trade. Invest; do your discipline monthly investment through the SIP route. Ajay Bagga, while speaking to the media on Sunday, said, “Do not try to time this market because I don't think the bottom has formed, but nobody knows when the bottom will be formed."
He indicated that Indian markets are pointing toward a "1.3 to 1.5 per cent cut at the open", driven by geopolitical friction rather than corporate fundamentals.
Bagga further said, "Last Wednesday, there was hope in the markets that something was coming when the ceasefire and the talks were announced. But that momentum has faded. So we are again getting negative on the Indian markets and against the earnings, driving the market and its geopolitical risk, which will drive the markets."
Rising crude oil prices remain a concern for the Indian economy
The primary concern for the domestic economy remains the sharp spike in crude oil prices, which have surpassed the USD 100 per barrel mark. For a country heavily reliant on energy imports, the rising cost of Brent and WTI poses a direct threat to the current account deficit and the stability of the rupee.
Ajay Bagga further noted that last year, India spent approximately USD 150 billion on energy imports, including crude oil, gas, and petrochemicals. At current price levels, that annual bill is projected to climb as high as USD 225 billion to USD 250 billion.
Bagga further explained, "Even over the weekend, what was happening was, if 40 people were asking for oil, only four were getting fulfilled. So what that is pointing out is that there is a shortage, plus you are having to pay anything from USD 120 to USD 140 per barrel. Now that will not stop because of what has happened. That shortage and the increase in prices will not stop. That will lead to inflation globally, including in India, and the slowdown in the economy," as per ANI.
The disruption also threatens India's trade and remittance ecosystem. Bagga highlighted that nearly 20 per cent of Indian goods exports are facing hurdles as transit through the Red Sea and Gulf of Oman becomes constrained.
(With inputs from ANI)
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