Speaking to ET Now, Prateek Agarwal, MD and CEO, MOAMC said that geopolitical shocks generally drive down valuations as uncertainty rises, but they often create opportunities when they become clear.
“When such conditions arise, uncertainty increases rapidly and market prices are exposed to high risk. Values fall below long-term averages, which eventually sets the stage for strong results after the uncertainty dissipates. The key question is how long this uncertainty lasts. For us, the biggest issue is business continuity and whether ship prices can fall significantly through the market and if oil prices fall significantly. Be stable.”
Gas supply disruptions affect industries
The impact of the ongoing crisis has already been felt in sectors of the economy. Many companies have exposed disruptions due to gas shortages as supplies are diverted to domestic use and transportation.
Industries that depend on gas as fuel or feedstock could face challenges if the disruption continues for a long period of time.
Aggarwal noted that the magnitude of the impact depends largely on how quickly the situation improves.
“If the disruption lasts for just a few days, companies can develop maintenance shutdowns. But if it continues, sectors that use gas as fuel may face shortages, and even fertilizer companies will eventually be affected. With the stabilization of fast-paced business routes and the availability of additional gas supplies, these issues can quickly be eased.”
He also pointed out that India’s strength in refined petroleum products could provide some cushion if exports temporarily slow.
“India is among the exporters of refined products. If the Hormuz disruption disrupts exports, some supply may come back to the domestic market, which could help maintain normalcy for a while. But the overall impact is time-bound.”
Minimum cash, limited portfolio changes
Despite the uncertainty, Agarwal said his fund invests heavily and does not take cash positions.
“We don’t believe in making big cash calls. Our funds typically invest with only minor adjustments. If you want a number, the cash rate will be around 4-5%.”
He added that the portfolio saw only selective trimming rather than major changes.
“We are not commenting on the conflict itself; we are looking at whether the Strait of Hormuz remains open for business. We have already highlighted information technology and have already cut some positions. We also have limited influence in sectors that are immediately affected by the gas shortage, such as restaurants, ceramics, fertilizers and some metals.”
Gradual investment may be the best approach
For investors looking to deploy money during the current volatility, Agarwal recommends spreading investments over time rather than trying to predict the exact bottom.
“A practical method is to invest gradually. If you have a fixed amount, regularly invest a portion and depend on how the situation develops. If the crisis ends quickly, you can accelerate; if it is long, you can slow down.”
He also noted that Indian markets may be relatively resilient given their recent weak performance.
“India has been one of the weakest markets globally in recent months. Because we were not in a bullish phase, the first phase of the correction here could be relatively limited, which is saving grace.”
Markets are waiting for clarification
For now, investors are focused on developments around the Strait of Hormuz and the broader geopolitical landscape. Any signal that the trading path is stabilizing can quickly improve sentiment and lead to a reversal in equities.
Until then, market participants are expected to remain cautious while preferably picking up stocks at more favorable prices.
