Another war in the Middle East was not in our expectations. We simply thought things may not come to such a pass. So many countries getting drawn in was never thought of. We thought this would involve just two countries.
A huge spike in oil prices wasn’t even part of the script. There were enough supplies of oil and the prices seemed most unlikely to rise in the near term.
Disruption of the global aviation industry at this magnitude was a complete surprise. We never thought that airspace would become unusable across so many countries.
Yet, all this happened so quickly in just a week, leaving us numb and wonderstruck.
The more important thing is how the markets simply took such adversity in their stride, as if this was just another event waiting to be discounted.
But the last word on this may still be waiting to be said. We need decisive closure to the risks of this battle turning horribly wrong. Or we need visibility of a truce that will bring life back to normalcy across the Middle East.
Aviation services and supplies to the Middle East must reach normalcy across countries. The coming week will be very crucial in deciding the course this war is taking and the direction the markets will take from here.
The markets are slowly moving on to worrying about the economic consequences of this war and how inflation will impact the world.
The inflation that has been created in a week is something that we hardly expected. Now we need to have visibility on how this inflation will be brought under control and what damage it will inflict on our economy.
High oil prices are clearly not a part of India’s macro script, as we assumed far lower prices than what we see now.
We need to have a path to lower oil prices and a shorter timeline to get there. In the absence of visibility on how oil prices will come down, what remedial measures are feasible to counter the impact of the prevailing oil prices, and how these prices will be absorbed by the economy, it becomes very difficult to predict the immediate future.
But in the midst of all this, the market seems to have taken everything in its stride, adjusted valuations down where it sees the risks remain for a longer duration of time, and moved on to hunt for value in beaten-down stocks.
The coming week should see the market decide on the way forward and give further clarity to investors seeking direction.
Investing during troubled times, responding to events like wars, managing the sharp hike in fears, and seeking opportunity in adversity are now a part of an investor’s everyday life.
Volatility is here to stay, and making sense of how to deal with it is now a regular feature in an investor’s routine.
