Global markets have come under pressure since the Iran war began, with equities declining, crude oil prices surging, and volatility rising across asset classes.
Dalal Street has reflected a similar trend. Indian markets have witnessed sharp fluctuations in recent sessions, as higher oil prices and global uncertainty continue to weigh on investor sentiment.
For many investors, the challenge isn’t just falling markets – it’s the confusion over what signals to follow. Headlines keep shifting between escalation and de-escalation, while oil price forecasts vary widely.
In this environment, Nakul Sarda says he has moved away from reacting to headlines and is instead focusing on a few key indicators that reflect actual market activity.
“Trump says the war ends tomorrow. Iran says Hormuz is shut forever. One analyst says $150 oil, another says $60. You can’t build a portfolio view on this,” Sarda said in a post on X.
He added that the situation is particularly critical for India.
“We run an India-focused equity fund. 85% of India’s crude is imported, and about half of that typically passes through Hormuz. So yes—this crisis is personal,” he said.
Any disruption along this route could push oil prices higher, fuel inflation, and put additional pressure on markets.
Four Signals Investors Should Track
Instead of reacting to headlines, Nakul Sarda said investors should focus on four key indicators that reflect real risk and supply conditions.
“These are priced by people with real money on the line. They don’t lie,” he said.
Ship insurance premiums
Sarda highlighted the cost of insuring ships passing through the Strait of Hormuz as the most critical signal.
Before the conflict, insurance stood at about 0.25% of a tanker’s value. This has now surged to between 3.5% and 10%, alongside a drop in demand.
“A $100M tanker that cost $250K to insure now costs up to $10M,” he noted.
According to him, a fall in premiums below 2% would indicate improving safety conditions.
Ship movement data
He also pointed to the number of ships crossing Hormuz as a key indicator.
Before the crisis, over 100 ships passed through daily. That number has now fallen to around eight.
“That’s a 92% collapse. You can’t spin a ship being somewhere it isn’t,” Sarda said.
He added that a recovery to 30–40 ships per day would suggest trade is normalising.
Paper oil vs real oil
Sarda said many investors are overlooking the gap between benchmark prices and actual transaction prices.
Brent crude is trading around $112, but Dubai physical crude—paid by Asian buyers—is closer to $126.
“That gap exists because headlines move paper prices, but real buyers aren’t getting any discount,” he explained.
“If you’re using Brent to assess India’s oil bill, you’re looking at the wrong number.”
Mid-April risk
Sarda also flagged mid-April as a crucial period.
Several temporary supply-support measures, including strategic reserve releases and policy waivers, are expected to expire around then.
“Right now, these stopgaps are keeping the supply gap at about 5 mb/d. Without them, it could double,” he said.
“If Hormuz doesn’t reopen by mid-April, we’re in uncharted territory.”
Sarda advised investors to avoid reacting to daily news flow and instead focus on these signals to understand how the situation is evolving.
“Track the insurance premium, the ship count, the paper-physical spread, and the April timeline. Everything else is noise,” he said.
As markets remain volatile, these indicators may offer a clearer view of whether the pressure is likely to ease or persist.