Markets had already sensed the turn
Speaking to ET Now, Singh pointed out that seasoned market participants had largely read the situation correctly even before the formal announcements came through. The previous Monday, he argued, marked the effective bottom for markets, once it became apparent that the United States would not commit ground troops to any military engagement with Iran.
“Once that was out of the way, it was pretty clear that the war is going to be fought with weapons and technology, not soldiers,” Singh said. With that tail risk removed, markets began recovering the losses accumulated over the prior four weeks. The fresh diplomatic language from both sides has now given that recovery additional momentum.
Singh did add a note of candour about the geopolitical stakes involved. He maintained that Iran should not be permitted to acquire nuclear weapons under any circumstances, and that the Strait of Hormuz — a critical global oil shipping lane — cannot be allowed to remain a pressure point in the hands of any single nation. Both outcomes, he suggested, should be firm red lines in any negotiation framework going forward.
Oil below $80 is the real signal to watch
Despite the optimism, Singh was careful not to declare victory too early on the energy front. With WTI crude still hovering around $96 per barrel at the time of the interview, he stressed that prices need to fall well below $80 before the relief becomes economically meaningful for both the United States and India.
“America can take a $70 to $75 oil, but anything above $80 becomes a challenge. For India, anything above $80 is of course a challenge,” he said plainly.
The concern is not academic. Elevated crude prices had sparked fears of stagflation in several economies, and India’s GDP growth forecasts had already been trimmed by around one percentage point due to the energy shock. Expectations were building that inflation in India could climb back to the 5% to 6% range, which would have significantly complicated the Reserve Bank of India’s rate-cutting path.
India’s inflation outlook gets a reprieve
For now, India’s inflation situation had remained relatively contained over the past year, but the risk of a renewed spike was real. A sustained fall in crude prices would remove one of the key upside risks to inflation and give the RBI more room to maneuver on monetary policy. Singh also flagged India’s significant dependence on natural gas imports from Qatar, noting that any easing of tensions in the broader Gulf region carries additional energy security benefits for the country.
On the US side, Singh noted that the Federal Reserve’s preferred inflation gauge, the PCE index, is expected to print around 2.8% to 2.9%, with CPI largely stuck in the 2.4% to 2.8% range. While some had hoped that Trump might ease tariffs to bring inflation back down to the 2% target, Singh sees that as unlikely, with tariffs likely settling at around 15%.
Where should investors put their money now?
Singh’s near-term advice to investors is refreshingly straightforward — stay where you were before the uncertainty began in February and allow the market to recover its footing before making any significant reallocation decisions.
A long-standing advocate of India’s top 100 largecap stocks, Singh acknowledged he remains a contrarian voice in a market that has largely chased returns in the broader midcap and smallcap universe. He noted the past two years have vindicated the largecap thesis, even if wider market sentiment has not fully caught up.
“The worst is behind us — that is the assumption I am working with,” he said. For investors willing to hold that view, patience and positioning in quality names may prove to be the most rewarding strategy in the weeks ahead.