With more than three decades of market cycles behind him, veteran investor Prashant Jain believes the current bout of volatility triggered by global conflicts is unlikely to leave lasting scars on Indian markets. Drawing on historical parallels, manageable oil‑shock exposure and stronger fiscal buffers, Jain argues that India is better positioned this time, and that the uncertainty weighing on stocks today may give way to opportunity sooner than many investors expect.
“I think this is not the first war that we are experiencing in the world,” he said. “Wars have been there for I don’t know how many thousands of years, and they eventually end,” he added.
Jain emphasised that India’s exposure to the ongoing conflict is indirect, primarily through energy prices and potential supply‑chain disruptions, rather than direct geopolitical involvement. “Since India is not a party to this war, our impact is mainly through the oil prices, the gas prices, and any disruptions in the supply thereof,” he noted.
While acknowledging that higher energy prices can have an impact, Jain argued that the magnitude and duration of this impact are likely to be limited. “I’m not saying it will not impact India,” he said, “but this impact will not, I think, be either material or permanent.”
He highlighted that India’s oil import burden, measured as a share of GDP, has come down significantly over the years. “India is far better placed to handle the oil price shock this time around than in the past,” Jain said, adding that oil imports now account for “around 3 per cent of GDP.”
He acknowledged that a sustained rise in crude prices could widen India’s current account deficit, but described the likely impact as manageable. “Even if oil averages at $110 or so, your current account can go from 1 per cent to 2 per cent,” he said. “It is possible. But I think that is quite manageable.”
On the fiscal side, Jain said years of consolidation have created some buffer for the government to absorb near‑term stress. “On the fiscal side, I think our fiscal consolidation has taken place,” he said. “There is some room to absorb some stress.”
That said, Jain cautioned that certain sectors could face pressure, particularly those sensitive to raw‑material or feedstock costs. “Of course, individual sectors that are facing challenges of feedstock, et cetera, they may get impacted,” he said, while stressing that the broader equity market remains relatively insulated.
Looking at the composition of benchmark indices, Jain pointed out that exposure to the most vulnerable sectors is limited. “If you look at the Nifty composition, I think there are hardly any or very few directly impacted sectors,” he said, adding that volatility at the index level remains “very low” in relative terms.
Jain did not rule out further market volatility if geopolitical tensions persist and energy prices spike further, but maintained that such phases tend to be temporary. “If you build a case that this will go on for a fair bit of time and oil will spike up further, then yes, it can have a further impact on stocks, maybe on the economy,” he said. “But I think these will also pass over the next few quarters, years.”
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
