Sunil Singhania, Venugopal Garre, U R Bhat, Rahul Singh decode market crash

Crude oil prices shot up over 25 per cent on Monday and sent most global financial markets, including Indian stocks, into a tailspin with the S&P BSE Sensex slipping over 2700 points in intraday trade before recovering partially. 

 

The Nifty 50 index, on the other hand, slipped below 24,000 levels to hit an intraday low of 23,697.80 on Monday.

 

Is the worst over for the markets, or are they headed into a bear phase? Is it advisable to buy the dip or stay on the sidelines till there is clarity on how the geopolitical events are likely to shape up? 

 

 

Leading market experts decode Monday's stock market crash, crude oil's sharp spike and the investment strategy that one can adopt in this backdrop.

 

Venugopal Garre, managing director, Bernstein

 

At this stage, we see this oil price rise as an acute event rather than a structural shift in the oil market. In the current setting, much hinges less on the precise length of the war and more on the trajectory of its intensity and geographic spread – where historic data is supportive: while wars have dragged on for years, typically the intensity materially reduces after the first few weeks. 

 

Any market reaction this time should be short-lived rather than a prolonged structural weakness. That said, escalation to a full-fledged war would be structural headwind which would cause us to revisit our India thesis entirely.

 

What the market is pricing in at the moment is a $110 level of crude to persist for around a month, and the earnings impact not extending beyond the March quarter. Any recovery to this within a week will improve sentiment sharply.  

 

However, persisting crude prices and conflict seeing continued escalations well into April will drive a major derating - the extent of which can be massive, and the usual support zones will no longer work. 

 

While most effects have been priced in already, one can take a sectoral call based on where one expects the conflict to go – ease from here quickly or last well beyond a month.

 

Sunil Singhania, founder, Abakkus Asset Manager

 

We had not expected the sharp rally in crude oil prices and the subsequent market sell-off. Our base-case was that the weekend might bring some signs of de-escalation. Until there are clear and concrete signs of de-escalation, investors are likely to remain nervous. 

 

In the near term—over the next one to two weeks or even a month—if the news flow remains negative, the markets could continue to remain concerned. At this point, the reaction is largely driven by news flow rather than fundamentals. In fact, before this geopolitical situation emerged, the Indian economy and corporate profitability were showing strong signs of recovery. Even the December quarter numbers were very encouraging. 

 

From an investment perspective, one should look at buying on dips if markets correct further. Historically, there is rarely a better time to invest than when stocks are down 30–40 per cent from peaks, rather than when they are at elevated levels. We have seen similar situations before. Even during the Russia–Ukraine conflict, oil prices spiked initially but cooled off fairly quickly.

 

In the near-term, we cannot say with certainty whether markets will fall further before rising again. But overall, we remain very positive. By December 2026, the markets could close at a much higher level than where they started the year.

 

Rahul Singh, CIO-Equities, Tata Asset Management

 

While we are not yet at rock-bottom levels that justify a maximum equity allocation, the thematic and “narrative” froth in a lot of sectors has receded. India’s valuation premium over other emerging markets has also moderated significantly. At this level, the market can attract its fair share of emerging market flows without requiring foreign investors to sell India to buy other markets like China, especially if they want a hedge to the artificial intelligence (AI) theme. 

 

U R Bhat, co-founder & director, Alphaniti Fintech

 

From here on, the trajectory for crude oil and the equity markets will spend on the (war) escalation and whether it comes close to a 'nuclear mission'. As long as we stay away from such an escalation, I don't think the stock market will go down too much from here. If more countries / organisations join, like say the NATO, or there is a big kill that Iran does in its neighboring countries, and/or Iran's newly-elected leaders get killed, markets are factoring in most of the existing information at current levels. 

 

Nifty 50 sinking to 19,000 levels is not impossible, but that will require the nuclear options to be exercised. We'll be present in this this virtual stalemate continues for some more time. The Nifty should find support around its 52-week low of 21,743.65.