US-Iran peace deal boosts markets; Nilesh Shah advises investors to stay disciplined, Anindya Banerjee sees stronger Rupee
Mumbai, June 15
Indian markets reacted positively on Monday after the announcement of a preliminary peace agreement between the United States and Iran, with experts pointing to easing geopolitical risks, lower crude oil prices and a stronger Rupee.
Speaking to ANI, Nilesh Shah, Managing Director of Kotak Mahindra AMC, advised investors to remain disciplined and avoid making allocation decisions based solely on short-term market moves.
"Market will watch spread of monsoon, AI flows as well as guidance from the companies. We recommend clients to follow asset allocation Dharam and remain neutral weight to equity with overweight to mid caps," he noted.
Shah said the US-Iran peace agreement is likely to support market sentiment in the near term.
"The announcement of US Iran deal finally happening will prop up market initially. Focus will be on the normalisation on the ground with supply chain flowing and prices coming back to double digits," Shah added.
On the currency front, Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, said the Rupee's gains could be sustained.
"We believe this marks the beginning of a more durable recovery rather than a one-off bounce," Banerjee told ANI.
According to him, easing crude oil prices and strong capital inflows could further strengthen the Indian currency.
"Over the next one to two weeks, we expect it to strengthen towards 94, and a decisive break of that level would open the door to 93, and potentially 92.5 over the following 2-3 months," he said.
Meanwhile, Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, said crude oil prices declined sharply as markets anticipated a gradual restoration of oil and LNG supplies from the Middle East.
"Crude oil prices are trading sharply lower... with markets anticipating a gradual restoration of Middle Eastern oil and LNG flows," Modi stated, adding that while natural gas also slid on fading tensions, seasonal summer cooling demand in the US might limit its downside.
Commenting on broader commodity trends, Deveya Gaglani, Senior Research Analyst at Axis Direct, said precious and industrial metals gained after the peace announcement, while crude oil prices fell.
"Gold, silver and industrial metals rallied on confirmation of a peace deal... Conversely, crude oil prices crashed as supply concerns eased," Gaglani said.
He added that lower energy prices have reduced inflation concerns and improved the outlook for risk assets.
"The probability of a rate hike decreased... Buying on dips will be the theme for one month as we also have a global event, i.e., the FIFA World Cup, occurring," Gaglani said.
Gaglani added, "The probability of a rate hike decreased... Buying on dips will be the theme for one month as we also have a global event, i.e., the FIFA World Cup, occurring."
— ANI
Reader Comments
Nilesh Shah's advice is gold—'asset allocation dharam' is exactly what we need. Too many people jump in after one good day. But I'm skeptical about mid caps; they've been volatile. Let's see how the monsoon season plays out.
Interesting that even FIFA World Cup is being mentioned as a factor—never thought global sports events could influence our market strategy. But peace is peace. Lower oil prices will help our inflation too. Good move by US and Iran.
One minor critique: analysts always talk about 'gradual restoration' and 'durable recovery,' but ground reality for small investors is different. Many of us got burned in the last oil price spike. Still, this optimism is much needed. Let's hope AI flows and monsoon don't disappoint!
As an NRI, this is huge! Stronger Rupee means better conversion for my remittances. But natural gas prices falling? That could be tricky for our LNG imports. Let's wait and watch how the monsoon actually impacts power demand. 😅
Buying on dips is the way to go! With peace in Middle East and lower crude, our economy has room to breathe. Just hope the Sensex doesn't get too euphoric and correct sharply next week. Moderation is key.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.