India to hurt if Iran War stretches in May—Kotak's Sanjeev Prasad on macro impact, unhurt sectors

Subscribe to enjoy similar stories.MUMBAI: For India, the fallout from West Asia conflict, while negative for the macro-economy, would remain manageable if a final peace deal is reached by mid-May.Any extension beyond that could push up oil price expectations and have a more severe impact, not just on the macro, but also on earnings for the current fiscal, which are otherwise expected to hold up better than the economy in the context of the war, according to Sanjeev Prasad, managing director and co-head, Kotak Institutional Equities.In an interview to Mint, he also explained why foreign investors continue to pull out despite valuations correcting.Edited excerpts:It is a little bit of a challenge as of now. The hope was that the West Asia war would end by early April...then mid-April and at the end of last month we were hoping for mid-May.

It just keeps on dragging. Obviously, it has negative implications for India's macro and also micro to some extent; more for macro I would say.In early March, we were working with a crude oil price assumption of $85 per barrel for the full year, which means effectively high prices in the first few months and then lower prices.

Now, two months are already over, and there are no signs of any peace framework.The assumption in the first two months was that since a lot of the developed countries were sitting on large amounts of inventory, they could deplete the inventory for the first few months and still manage.But now with the war continuing for longer, there are more challenges. First, oil supply is lower than expectations, which could be in the range of around 10 million barrels per day, or nearly 10% of the 104 million barrels per day consumed globally.