Triple-digit oil or supply shock could hurt Indian equities, says Nilesh Shah
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As global geopolitical tensions escalate and crude oil prices edge higher, Kotak Mahindra Asset Management Company's Managing Director Nilesh Shah has warned that any sharp spike in crude oil or disruption in supply could have a negative impact on Indian equity markets 'Indian equity and rates market is like a man having average temperature as one leg is in cold water and the other in hot water,' Shah said, using a metaphor to highlight the current divergence between domestic and global signals.According to him, domestic factors continue to support current valuations, making Indian equities attractive for long-term investors expecting moderate returns. However, he flagged global concerns—ranging from U.S. policy actions to oil market uncertainty—as a rising threat.'Global factors from Trump policy to oil price/supply are boiling hot,' he said.The warning comes amid a dramatic escalation in the Israel-Iran conflict. The United States launched coordinated airstrikes on three key Iranian nuclear facilities—Fordow, Natanz, and Esfahan—over the weekend, with U.S. President Donald Trump confirming that 'a full payload of bombs' had been dropped on the primary target, Fordow. He added that all aircraft involved had safely exited Iranian airspace.The U.S. involvement marks a significant escalation, positioning it directly alongside Israel in efforts to dismantle Iran's nuclear infrastructure. Iran has vowed retaliation, raising fears of broader conflict in the Middle East. In response, the U.S. has also started evacuation flights from Israel.'We need to keep a watch on the availability of oil as well as its prices. Oil prices crossing triple digits or restricted supply will have an adverse impact on the market,' Shah said, noting India's reliance on imported oil despite healthy FX reserves. Brent crude has surged over 15% to $77 per barrel, while WTI crude has jumped 17% to $74.9 in the past eight trading sessionsAmid this uncertain environment, Shah advised caution for traders but struck a more optimistic tone for long-term investors.'Traders should be extremely cautious. Investors should use correction as an opportunity to accumulate,' he added.Also Read: US strikes on Iran may rattle markets: Will Nifty, Sensex react to escalating geopolitical risk? (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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