Over 90% of India’s LPG requirement transits the Hormuz Strait — largely from Saudi Arabia. Fertiliser supply and LNG imports from Qatar face the same chokepoint risk if the conflict extends beyond weeks.
When geopolitical crises hit markets, investors instinctively reach for price targets — where will oil go? Nandan Chakraborty, Head of Research Strategy at DAM Capital Advisors, says that’s the wrong question entirely. Speaking on ET Now, he argued that the duration of the disruption is the only variable that genuinely matters for Indian portfolios right now.
“Whether oil touches 100 or 120 for one week is not really material. What is material is whether this whole thing will last a week, a month, or six months.”
Strategic petroleum reserve releases from the US and Japan — widely cited as a buffer — barely register against the volume of trade being choked at Hormuz, and most of it will be consumed domestically anyway. His advice: stop tracking SPR headlines and start monitoring how the conflict evolves week by week.
The macro risk for India
India is structurally exposed. As one of the world’s most oil-import-intensive economies, a prolonged disruption hits on two fronts simultaneously: inflation pushes interest rates higher, pressuring the banking and lending ecosystem, while fertiliser and LPG availability — both heavily routed through Hormuz — threatens agricultural and household energy supply chains.
Chakraborty notes that fertilisers could potentially be rerouted via Russia through the eastern Vladivostok corridor or the Red Sea if Houthi activity permits, but LPG offers no such alternative. With 90% of supply originating from Saudi Arabia via Hormuz, any extended conflict creates a near-inescapable bottleneck for Indian households and industry alike.
Supply chain stress, he noted, remains somewhat cushioned — only about 20% of total trade has been directly affected, and the impact has been heavier on bulk cargo than containers. For exports and imports to the US and Europe, both the Cape of Good Hope and eastern routes remain viable. But the buffer is not unlimited, and inventories built over the past 15–20 days are beginning to thin.
The portfolio strategy: cash, growth, no value traps
ETMarkets.comChakraborty’s investment framework for this environment is deliberately simple. Hold meaningful cash. Resist the urge to act immediately — the market will offer time because it has been underperforming for over a year already. When dislocation creates over-discounted growth stocks, deploy selectively into sectors where earnings momentum is structural, not cyclical.
“See what is over discounted or under discounted and do not get into a value trap — stick to growth stocks. In India, growth is usually NBFCs, consumer discretionary, defence, renewables,” says Chakraborty.
On IT, Chakraborty is cautiously constructive but makes a key distinction: midcap IT is better positioned than large-cap peers in the near term. The reason is structural — smaller deal sizes mean midcap firms face less pricing pressure as AI-driven deal compression plays out across the sector. Valuations in both segments have already corrected significantly to account for the AI disruption risk, which he sees as a partial opportunity.
Consumer non-discretionary is, in his view, now behaving like a cyclical — PE ratios oscillate while earnings stay anaemic. The real consumer opportunity lies in discretionary: QSR, e-commerce, auto adjacents, and crucially, NBFCs which he frames as a consumer discretionary play in their own right. Hospitals and healthcare-adjacent names, including mid-cap pharma and CDMO-linked businesses, also feature prominently on DAM Capital’s current watchlist.
ETMarkets.com