For Ashi Anand, Founder and CEO of IME Capital, one variable towers above all others in determining where Indian markets go from here: whether ships start moving through the Strait of Hormuz again.
Speaking to ET Now, Anand said his firm is maintaining a defensive market position until there is meaningful resolution to the US-Iran crisis. "Even if there is no long-term deal signed, as long as there is some temporary deal that allows ships to start moving again, that is what we need," he said. Without it, he warned, oil prices will continue inflicting serious damage on the broader economy.
The concern is not abstract. With Brent crude hovering near $110 per barrel, Anand argued that India is approaching the upper limit of what its economy can absorb. Sustained oil prices above $100 simultaneously stoke inflation, widen the current account deficit, and create supply disruptions across certain industries. He pointed to the Prime Minister's recent announcement of austerity measures — aimed at protecting India's forex position — as a signal that policymakers are already feeling the strain.
IME Capital's base case is that some form of resolution emerges within weeks. But Anand was explicit: the longer the crisis drags on, the more cautious the firm becomes, and further market downsides are firmly on the table.
Fuel price hikes are just getting started
The recently announced Rs 3 per litre fuel price increase, Anand said, covers only a fraction of the actual cost increase that OMCs have absorbed. As long as oil remains elevated, consumers should expect phased increases to continue, in both petrol and diesel.
The logic is straightforward: the government can absorb some of the hit in the short term to protect consumers, but doing so indefinitely would damage OMC financials and eventually strain government finances through second-order effects. Each successive increase will feed through to headline inflation, reinforcing the case for a cautious near-term market outlook.
Pharma and metals: Two very different stories
Despite the broader pressure on markets, Anand sees legitimate fundamental reasons behind two of the week's outperforming sectors, though the drivers are quite distinct.
Pharma's resilience, he explained, reflects both its classic defensive characteristics in weak markets and a specific growth catalyst: the rollout of GLP-1 weight-loss drugs across India and other emerging markets. With the headwind from declining Revlimid sales now easing, the sector has a credible new growth story to replace it.
Metals, by contrast, are catching a wave from the global AI infrastructure build-out. Cloud hyperscalers are projected to spend roughly $1.5 trillion on AI data centres over the next couple of years. That scale of capital deployment creates concentrated demand for specific commodities, copper, rare earth materials, and silver among them, and metals stocks are beginning to price in that dynamic.
China-plus-one: One good meeting changes nothing
On the Trump-Xi summit, Anand urged investors not to read too much into the positive optics. The structural forces driving supply chain diversification away from China, rising costs, Covid-era vulnerabilities, and the deepening US-China technology competition — remain firmly in place. A single diplomatic meeting, however cordial, does not reverse those trends. India's China-plus-one tailwind, in his view, may soften slightly at the margins in the near term but is unlikely to meaningfully unravel.
