Ace investor Shankar Sharma had his first tryst with the fallout from the Iran war when a kamikaze or suicide drone skimmed over his villa in Ras Al-Khaimah, one of the seven Emirates of the UAE, late Sunday night.
“This is the first time we find ourselves in such a situation …it’s serious and nobody anticipated the scale of this conflict,” Sharma, who has been based in the UAE for 15 years, told Mint .
“It’s no quick-ending T20 game, by the looks of it… this war with Iran getting hit a lot, while continuing to hit US bases in the GCC (Gulf Cooperation Council ) and even civilian infrastructure,” Sharma said.
On the regional conflict’s impact on India, he said India would continue to be a laggard for the second year in a row if the conflict gets protracted and crude prices rise swiftly. This would pressure India’s balance of payments, in turn, adding pressure on the rupee and eroding FPI returns.
Asked about the asset class he would recommend under the circumstances, Sharma answered: commodity trade.
“In addition to precious and base metals, one could buy crude oil based stocks to ride the turbulence,” he said.
Crude oil active futures on commodity bourse MCX traded up 9.87% at ₹6,092 a barrel at the time of writing Monday, reflecting the growing tensions in West Asia. Gold futures contract was up 4.88% at ₹1.62 lakh per 10 gm while silver futures traded 5% higher at ₹2.83 lakh a kilo.
The crude oil surge and the risk-on sentiment saw the rupee ending lower by 49 paise at 91.47 to the dollar, per Bloomberg data.
As of Monday’s close of 24,865.7 the Nifty is down 5.7% from its record high of 26,373.2 on 5 January this year. Investors lost more than ₹6 lakh crore in a single session as the overall market capitalisation of BSE-listed firms dropped to ₹457 lakh crore from ₹463.50 lakh crore in the previous session.
In markets parlance, a 5-10% fall from the high is termed a pullback and a 10-20% drop a correction. When the fall is more than 20% from a record high, it is called a bear market.
