In the midst of ongoing market turbulence, investors are weighing whether current price corrections signal caution or opportunity. Vikas Khemani, a seasoned market strategist, from Carnelian Asset Management shared his perspective on navigating such volatile times.

“When these kinds of crises come and go, the good news is that this time around, the Indian economy and micro fundamentals are much stronger than in past crises. That at least gives you added comfort,” Khemani said. “But definitely, like I always say, good price and good news do not come together. So, whenever there is good price, it is accompanied by some bad news, which is what it is today. Also, one needs to see that the long-term terminal value of equities does not get changed because of short-term movements, and that largely determines equity valuation. Hence, any such aberrations are generally, unless they are expected to put a permanent dent on any business, an opportunity to buy.”

When asked where investors might find attractive buying opportunities, Khemani highlighted sectors closely aligned with the domestic economy. “Look at banks, which are completely aligned to the domestic economy. We have seen good corrections because of this event. I know that temporarily, there could be some impact on one quarter’s profitability, but they do not change anything on the business. Consumer sectors and consumer sentiment can also change in the short term, with some dents in margins here and there, but structurally it does not change anything. Even the pharmaceutical sector, which is quite defensive in these times, ends up seeing flows coming through. So, usual domestic economy-aligned sectors where you are seeing large corrections due to this situation are opportunities to buy.”

On the divergence seen within the banking segment, with some large private banks under pressure while public sector banks (PSBs) offer valuation comfort, Khemani said: “We actually like both PSU and we recently owned some PSU banks as well. Historically, we have always been bullish on private banks, but in the last couple of years we have been more positive on PSU banks as well because there is clear value, and they have been delivering good growth in the last three-four quarters. So, we continue to remain balanced in both segments.”

As markets continue to digest global and domestic uncertainties, Khemani’s advice underscores a long-term perspective: short-term volatility can present buying opportunities in fundamentally strong sectors.

Biggest one-day gain in six years as the Middle East conflict disrupts key oil infrastructure and Strait of Hormuz traffic

The price of oil has surpassed the $100 threshold for the first time since the energy crisis in 2022, with analysts warning the economic ramifications could exceed those of Russia’s invasion of Ukraine.

Brent crude, the international benchmark for oil, jumped more than 25 per cent to peaks of $118 per barrel as the week’s trading commenced in Asia – representing the commodity’s largest single-day rise in six years.

The latest spike occurred as the Middle East conflict continued to strike crucial oil infrastructure, prompting nations to reduce production whilst movement through the vital Strait of Hormuz – through which approximately a fifth of the world’s oil supply passes – has virtually ceased.

Kuwait’s state oil company announced over the weekend it was reducing output, whilst the United Arab Emirates’ state-run oil firm stated it was “managing” some output, indicating potential production reductions.

In 2022, Brent crude momentarily exceeded $120 a barrel and reached peaks of $145 a barrel in 2008, with both movements resulting in significant repercussions for the global economy, as reported by City AM.

Kathleen Brooks, research director at XTB, observed Iraq was now producing a quarter of the oil it generated before the US and Israel attacks on Iran, at 1.3m barrels per day down from 4.3m.

“This is roughly three per cent of global oil supply lost in a single event. Shockingly, this is worse than the oil supply situation after Russia attacked Ukraine.”

Wall Street giant Goldman Sachs has predicted the price of oil could surpass the $150 threshold by year-end if the Middle East conflict remains unresolved.

Analysts at the investment bank have cautioned the ramifications of the US and Israel’s confrontation with Iran could prove 17 times more severe than the April 2022 peak, when global economies grappled with an energy crisis following Russia’s invasion of Ukraine.

Goldman Sachs had anticipated that oil flows through the Strait of Hormuz would decline to 15 per cent of normal levels. However, the Iranian blockade has meant only ten per cent of oil shipments that typically transit the waterway have managed to pass through.

On Friday evening, analysts at the Wall Street powerhouse issued a note stating: “Based on these new data, developments and the size of the shock, we now think that oil prices would likely exceed $100 next week if no signs of solutions emerge by then”.

In a Truth Social post responding to the latest price spike, Donald Trump has described it as “a very small price to pay for USA, and world”.

The US president declared the oil price rises “will drop rapidly when the destruction of the Iran nuclear threat is over”. Elsewhere, the Financial Times has reported that G7 finance ministers are poised to discuss a potential co-ordinated release of petroleum from reserves, overseen by the International Energy Agency in an urgent meeting today, aiming to address soaring oil prices amidst conflict in the Middle East.

The ministers and Faith Birol, Executive Director of the International Energy Agency, are anticipated to conduct a call at 8:30am New York time to explore strategies to alleviate the impact of the Iran war.

The following segment was excerpted from the Royce Small-Cap Fund FY 2025 Manager Commentary.

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Five of the Fund’s 10 equity sectors made a positive impact on calendar year performance, led by Industrials, Financials, and Information Technology while the

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The Indian rupee remains under pressure amid escalating geopolitical tensions and a sharp surge in global crude oil prices, with currency markets closely watching the next move by the Reserve Bank of India (RBI). As the dollar strengthens globally and oil-import demand rises, traders expect continued volatility in the domestic currency.

The rupee is currently hovering around the 92.2 mark against the US dollar, reflecting growing concerns about India’s import bill and external balances. The spike in crude prices, triggered by the intensifying conflict in the Middle East, has added to the downside risks for the currency.

Speaking on the outlook, Naveen Mathur from Anand Rathi Share said the rupee could weaken further in the near term if geopolitical tensions persist and oil prices remain elevated.

“The rupee has a depreciative stance, as I said earlier too in the call. The rupee is at around 92.21. A further fall to an extent of 92.30 or 92.40 is looking like a possibility. Sharp escalation in the Middle East conflict and the soaring crude oil prices would definitely be a dampener for the rupee against the dollar,” he said.

He pointed out that the currency had earlier found some support due to intervention by the central bank, but global developments have once again tilted the balance against the rupee.

“We did see the RBI intervention last week, which held the rupee against the dollar to around 91.50 levels. But post that, the escalation in the Middle East is putting pressure on oil, and WTI and Brent are quoting at around $114 a barrel, which is plus $25 a barrel just in the opening session,” Mathur said.
According to him, the combination of higher crude prices, geopolitical uncertainty and a stronger US dollar is weighing heavily on emerging market currencies, including the rupee.“The rupee depreciative stance is a possibility to continue in the near future until and unless we see a major positive development on the Middle East tensions. The dollar is also appreciating. The dollar index is at around 99.60 from the lows of around 95 two months earlier. The dollar appreciation, crude, and Middle East tensions are all putting pressure on the rupee on the downside,” he added.

Another key factor that could intensify pressure on the rupee is rising demand for dollars from oil marketing companies (OMCs), which typically increase their purchases when crude prices rise.

“Exactly, it would be the case. The dollar demand would be there, which would be a further dampener to the rupee against the dollar. RBI intervention would be expected to hold the rupee,” Mathur said.

However, he noted that the central bank’s focus remains on managing volatility rather than defending a specific exchange rate level.

“The RBI has said that they would not see any particular level for the rupee against the dollar. They would maintain volatility, or rather curb volatility. At the same time, imports, the fiscal deficit, and the current account deficit would be the key to watch out for, and hence RBI intervention would be critical,” he said.

He also suggested that state-run oil companies and large public sector firms may step up their dollar purchases in the current environment.

“I am sure that the ONGCs or the PSUs of the world would definitely be looking for dollar buying at this stage,” Mathur noted.

Whether the RBI will step in again to support the rupee remains uncertain, especially with global currency flows currently favouring the dollar.

“Anybody’s guess, but it would be the decision of the RBI monetary policy stance to hold the rupee at a certain level. If that is the case, the RBI might intervene before the rupee sees further depreciation against the dollar,” he said.

For now, the trajectory of the rupee will likely depend on how the geopolitical situation unfolds, along with the movement in crude oil prices and the strength of the US dollar in global markets.