Cost of Turmoil in West Asia; Sunil Singhania says India’s long-term story is intact

In an interview with ET Now, market veteran Sunil Singhania explains why the current West Asia conflict is impacting Indian equities more than past geopolitical events, how oil, the rupee and global flows are intertwined and why he believes most risks to long-term prospects are intact.

Why is this geopolitical episode impacting Indian markets more than past events?

Markets have recovered from past crises and are likely to do so again. The main difference this time is not just higher oil prices but also supply disruptions due to issues around the Strait of Hormuz. There is also a constant, uncertain news flow, which keeps sentiment volatile. That said, the markets are slowly stabilizing and starting to move up.

From an investor’s perspective, is this primarily an oil story, a rupee issue or a broader risk-off trend?

It is a combination. This comes after 18 months of underperformance by Indian markets versus global peers. Earlier, high valuations, slow growth, weak earnings and a global shift towards tech-heavy markets led to FPI outflows. Just as things were improving—growth picking up, earnings recovering, and policy support kicking in—the struggle hit. Oil prices, currency pressures and risk-off sentiment are intertwined here.

What can break this cycle of pressure on markets?

De-escalation of conflict is key. If tensions ease, crude prices may fall by $20-25, which will improve sentiment significantly. In fact, I believe that about 90% of the current risk is already priced in, making the risk-reward favorable from here.

With heavy FPI outflows, can domestic investors continue to support the markets?

Local investors have shown strong resilience and continue to invest with a long-term view. SIP flows and investor confidence remain intact. While FPI selling has been heavy, India’s fundamentals—strong GDP growth, improving earnings outlook and attractive valuations—should eventually bring foreign investors back.

What is your outlook on India amid all this uncertainty?

Despite the current challenges, India is the fastest growing major economy with GDP growth of over 6.5%. Valuations have improved and India’s weighting in global portfolios is at a decade low. As growth and earnings recover, domestic and foreign investors are likely to increase exposure again.