The US–Iran–Israel conflict has now been underway for over a month, and its fingerprints are visible across every major asset class. Oil prices are up over 44% since the war began. Equity markets are volatile. The US dollar is strengthening. And emerging markets, India included, are bearing the brunt.

Here is what our macro team is watching across themes.

Oil: The Strait of Hormuz Is the Story

Twenty percent of the world's oil supply, and all of Qatar's LNG exports, pass through the Strait of Hormuz. With the Strait effectively closed, alternative pipeline routes can cover less than half the displaced volume. The recent release of 400 million barrels from strategic petroleum reserves provides only about a month of buffer. If the conflict extends further, oil prices could remain under pressure, with the floor likely settling closer to $80–85 per barrel even after a resolution, due to damage to key oil fields and longer alternative transit routes.

US Equity: Tech Holds, But a Split Is Widening

Despite the geopolitical backdrop, the US tech sector has been notably resilient, down only 3% since the war began, compared to a 5.4% decline in the S&P 500. Within tech, AI-related names continue to outperform traditional software. The structural divergence between the two has been building since 2020, and we believe it reflects more than momentum: AI is increasingly seen as essential infrastructure, while parts of legacy software face the risk of commoditisation. A useful distinction - systems of record (deep, business-critical platforms) are likely to retain their moat; systems of engagement face greater disruption risk.

The US Dollar: Safe-Haven Demand Returns

Historically, rising oil prices and a stronger dollar tend to move in opposite directions. That relationship has broken down. The USD and oil are now rising together, as safe-haven demand overrides the traditional dynamic. The Swiss franc is also gaining. Most emerging market currencies — the Korean won, Taiwan dollar, and Indian rupee — have depreciated sharply since the war began. The DXY could approach 105 if the conflict continues.

US Interest Rates: Rate Cut Expectations Have Collapsed

US inflation in March 2026 could push above 3%, well above the Fed's 2% target. Rate cut expectations for 2026 have effectively been priced out. A prolonged pause on cuts — combined with a firmer dollar — creates additional headwinds for global risk assets, particularly emerging markets.

India: Macro Vulnerable, but Valuations Are Adjusting

India finds itself in a difficult position: a depreciating rupee, elevated oil prices, and the risk of wider current account deficits. Our scenario analysis suggests that at $90–100 oil, India's current account deficit could widen to $90–101 billion, CPI inflation could exceed 5%, and real GDP growth could moderate to 6.2–6.4%. Retail fuel prices have not yet been raised, with oil marketing companies and the government absorbing costs — but a gradual pass-through becomes more likely if elevated prices persist. The silver lining: valuations have corrected sharply. The Nifty 50 forward P/E is now at 17.6x, approaching its long-period average of 16x. For patient investors, this begins to provide incremental comfort.

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