Market Recovery from War to Take 6-12 Months, Says JM Financial's Kampani

Kampani noted that while the conflict would affect growth rates, the impact was likely to be short-lived.

Speaking to ANI on the sidelines of AIMA's 11th National Leadership Conclave, Kampani expressed optimism regarding a potential resolution to the conflict in the coming weeks. He indicated that the domestic economy historically showed resilience during global crises and predicted a similar outcome for the current situation.

"Crude behaves in a funny way. Ultimately, in the long-term, Crude will follow demand and supply. I mean it depends on where Crude settles, above 100, below 100, how long it settles....But having said that, if the impact is very material, then demand will slow down and if demand slows down, there is no reason for Crude oil prices to be high because the Middle East will resolve its bottlenecks and resolve its issues. So as I said, the 6 months to 12 months issue that we are grappling with, but I'm very confident that we will see through it," Kampani stated.

The Senior VP highlighted the volatility of crude oil prices and their dependence on global demand and supply dynamics. He pointed out that the duration of price stability remained uncertain due to unknown factors affecting energy infrastructure in the Gulf region.

" What is a big unknown right now is that we don't know the impact on the energy infrastructure in the Gulf. So, how fast will the Gulf be able to make sure the supply chain at their end is smooth and they are able to pump enough oil and send enough gas out? So that is a that is an uncertainty because of which it's very hard to predict three to six to nine months from now where oil and gas prices will be," he added.

Regarding the potential for long-term disruption, the executive noted that the duration of the crisis depended on the extent of infrastructure damage in the Gulf. He suggested that if major energy assets faced a significant impact, the recovery period could extend beyond the projected twelve months.

"If the war continues and the damage gets worse, and you see a significant supply of almost 20% of world oil and gas impacted, a significant portion of that impacted, then of course this issue will last longer than 6 to 12 months. But we'll have to see. It's very hard to predict that," he said.

Speaking about India's situation amid the war, Kampani backed the country as it has stood its ground multiple times in the past during crisis situations as well.

"War will definitely impact our growth rate, but I don't think it will be long-lived. I'm hoping that the truce will reach a termination event at some point in time in the next few weeks and the resolve from both sides seems to be that we need to end the war and if that were to happen then I think that probably will be six months of pain but as you've seen India emerge even stronger from every crisis in the last decade the same thing will happen with this crisis as well and I'm very confident," Kampani said.

The Senior VP noted that markets generally reacted more quickly to shifting conditions compared to the broader economy.

"See, I think the markets will recover faster than the economy because the markets are very forward-looking. Economy, as I said, 6 months," he said.

- ANI