Santosh Rao from Manhattan Venture Partners said that the current volatility in global markets is a natural reaction to an uncertain environment. “Market confusion is the right reaction. We just don’t know where it is going. The rhetoric is going here and there,” Rao said in an interaction with ET Now. He added that the situation could continue for some time as both sides are unwilling to de-escalate immediately. “Trump always has a habit of bombing and then pulling back. The Iranians are well on their way. So this will continue for a while,” he said.
The ongoing violence also raises concerns about broader economic consequences, particularly the risk of inflation and supply disruptions. Rao noted that the conflict comes at a time when the global economy is already facing many challenges. “This is the last thing the world needs right now. It has an inflationary effect. It has a panic effect.” He explained that markets are anticipating future risks.
A major concern for investors is the potential disruption of the flow of crude oil through the Strait of Hormuz, an important route for global energy transport. Any prolonged disruption could push oil prices higher and put pressure on economies around the world, including emerging markets like India. “It will be very dangerous, very bad. It will not be good for the economy,” Rao said, warning that the conflict would have lasting economic consequences. He also warned that even if the hostilities end soon, the psychological effects on markets and businesses will continue. He said: “A bomb here, a bomb there… that has a severe impact on the economy and emotions.”
Given the uncertainty, Rao advised investors to remain cautious rather than rush to buy stocks during market weakness. “For bottom fishing, OK, you can go in … but at this point we don’t know where the bottom is,” he said. He added that it would be better for investors to be patient and monitor developments closely.
At the same time, he noted that history shows that markets often recover after major geopolitical shocks. Referring to past trends, Rao said markets bounce back once the initial wave of fear subsides. “History is a bit of a guide. One, three and six months after a big event like this, the market goes up.” He said, noting that strong business fundamentals often help equity recover over time.
Energy markets remain another key variable in the current environment. Oil prices have risen amid fears of a supply disruption, but Rao believes prices could eventually stabilize as stakeholders work to restore normal flows. “There’s definitely going to be some confusion and some price confusion,” he said. He added that oil prices will rise further if the violence continues. “Everybody needs oil. Iran also needs oil money,” Rao said, stressing that energy trade remains vital for all stakeholders.
For now, investors are focused on geopolitical developments and their potential economic impact. Until more clarity emerges, markets may remain volatile as participants weigh short-term risks against the potential for a recovery once volatility begins to ease.
International Financial Markets
