June, 2026

War… what is it good for?

Mohit Dugar, CFA || ARN - 314375

Apparently, war is great for business. But, of late, war has proven to be even greater for two countries – Russia and Iran. What was supposed to be an easy US dominance has turned out to be a difficult proposition to get out of. Before war, Russia and Iran were under heavy sanctions, but now they have got temporary reliefs. Russian energy shipments are at record high and India has also resumed Iranian oil purchases after seven years amid the temporary relief. So, to reiterate, who has actually benefitted from the war?

Trump’s tantrums continue to haunt the global markets as he says one thing and does the complete opposite. He says the war is over but the very next day launches a new offensive. The talks are still ongoing between Iran and US, but, the conflict keeps on escalating as both the sides refuse to show restraint with Iran attacking Kuwait and Fujairah in UAE. All this uncertainty has led to an escalation in crude prices and ignited fears of heightened inflation.

On the domestic front, May has been a very eventful month. Four states had assembly elections with BJP retaining Assam and with a major victory in West Bengal – forming the Government for the first time. Actor turned politician Vijay winning Tamil Nadu and UDF retaining Keralam. Sugar exports were banned by the Government amid a possibility of deficit in meeting domestic demand. Diesel & Petrol prices were increased 4 times totalling ₹7.5 approximately, in order to offset high crude cost. Despite the hikes, oil companies are still losing money daily. Commercial LPG price also went up by ₹993.

The INR was under immense pressure, plunging to an all-time low of 97 vs USD, prompting RBI to step in and do damage control. On May 10^th, PM Modi addressed the nation – urging citizens to preserve ForEx by not going abroad, doing carpool and/or working from home. FIIs have been dumping Indian equities relentlessly – pressuring INR even further. So far, FIIs have sold more than $20 billion worth of Indian equities. DIIs with a robust SIP pipeline have stepped in again and again to safeguard the equity markets from the relentless onslaught of FIIs. To protect ForEx and INR, the Government has hiked duty on Gold and Silver imports from 6% to 15%.

PM Modi also went on a 5-nation tour, covering UAE, Netherlands, Sweden, Norway and Italy. In UAE, a crude storage deal was signed – potentially storing up to 30 million barrels of crude in India's petroleum reserves. UAE also committed to $5 billion investment in India. In Netherlands, ASML (the only company in the world manufacturing advanced lithography and EUV machines used in semiconductor manufacturing) has partnered with Tata to manufacture semiconductors in India. Also, India and Vietnam have upgraded their ties to Enhanced Comprehensive Strategic Partnership with focus on boosting cooperation in trade, defence, connectivity and technology.

On the macro side, gross GST collections ease to Rs 1.94 lakh crore in May from April record as growth slows to 3.2%. CPI inflation stood at around 4% and WPI inflation was around 8.3%. FDI inflows rise 17% to $95B; net FDI at $7.7B for FY25-26. Record dividend of ₹2.9L crore by RBI to the Government. in FY25-26. Indian crude basket stood at $97.52/bbl, below $100/bbl for the first time since the West Asia crisis.

New problems are emerging one after another, and sentiment is becoming increasingly pessimistic. Good news is now worth its weight in gold. It is times like these that teach patience, and it is times like these that create wealth.

Everyone is asking when FIIs will re-enter the markets. No one knows for sure, but when they do, one should be ready – start building positions, take calculated bets, and remain patient. Markets are at attractive valuations, good bets and a resilient portfolio will definitely pay off!

www.pinnaclefinvest.com

mohit@pinnaclefinvest.com

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