The research arm of Europe's largest asset manager says an end to the Iran war would be a turning point for India. Bloomberg reports that the Amundi Investment Institute sees room for Indian equities to rebound after a steep selloff. The selloff was driven by high oil prices and persistent foreign investor outflows.

What Amundi Said

The analyst quoted by Bloomberg said, "I'm quite positive," and pointed to improving private investment and other economic data. [Add the analyst's name, title and any target levels from the full article, which I could only partly access.]

Why India Was Hit Hard

  • Oil dependence: India imports most of its crude, so high prices pressure the trade deficit, the rupee and inflation.
  • Hormuz exposure: an earlier analysis by policy writer R.S. Jain noted that the Strait of Hormuz accounts for almost 60% of India's LNG imports, with only days of inventory held.
  • Foreign selling: investors moved money out of Indian equities in a flight to safety once the war began.

The Growth Stakes

Forbes reported in May that EY estimated a prolonged conflict with high oil could erode India's growth by up to 1 percentage point. The same piece said that an end to the war, with oil back below $100, could lift consumer demand. It cited Fitch's view that growth could recover to 7.5%. Those estimates date from earlier in the conflict and may have changed.

Where the War Stands

India welcomed a US-Iran ceasefire on April 8, hoping it would lead to lasting peace and free navigation through Hormuz. Large-scale fighting later resumed, and the Pentagon this week raised its US troop death toll to 21. Amundi's view therefore depends on a durable end to the war, which has not happened yet.

Risks to the View

  • The war has already outlasted earlier market expectations. Amundi's CIO said in March that markets had shifted from expecting resolution within weeks to months.
  • Oil could stay high if the conflict drags on.
  • Foreign outflows could continue until there is clarity on earnings and valuations.

Key Takeaways

  • Amundi's research arm expects Indian equities to rebound once the Iran war ends.
  • High oil prices and foreign outflows drove the recent selloff.
  • The call depends on the war actually ending, and timing is uncertain.