US-Iran Ceasefire Triggers Shift in Global Equities Towards Non-US Markets

Market Rejoices Over US-Iran Ceasefire, Oil Prices Plummet

The US President Donald Trump and Iran's announcement of a two-week ceasefire tied to the reopening of the Strait of Hormuz has brought relief to global markets. The Strait of Hormuz and tanker insurance costs are "the two most critical near-term indicators" of the market sustaining positive momentum, according to Pankaj Tibrewal, founder and CIO of IKIGAI. With tanker traffic beginning to recover and oil prices plunging below $100 per barrel, Tibrewal believes that the world has entered a permanently tighter energy regime.

The conflict delivered the largest oil supply-chain shock in history, with 16 to 20% of global crude (16 to 18 million barrels per day) offline through the Strait of Hormuz. While logistics are now normalizing, Tibrewal's assessment of the energy backdrop has not changed. He believes that $80 to 85 per barrel is the new normal for crude, with prices below $60 unlikely for the foreseeable future.

India Inc Positioned to Gain from Inflation

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Listed Indian companies are actually benefiting from the raw-material inflation, according to Tibrewal. After years of deflationary pressure, pricing power has returned, and corporate India has delivered double-digit earnings growth for the last two quarters. Tibrewal expects the current quarter to hold up well with minimal disruptions. For instance, PVC prices have almost doubled from Rs 60/kg to Rs 110/kg, with smaller, unorganised players struggling with working-capital shortages and inventory losses, while listed players (such as Kajaria, Somany and Cera in tiles) are gaining market share.

Tibrewal believes that the new normal for corporate India earnings growth is around 9% (versus 6 to 6.5% a decade ago). Private capex is also recovering meaningfully, with mid- and small-cap sectors seeing 30% and 21% growth respectively.

India's Macro Shock Absorbers Stronger than in Past Crises

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Tibrewal contrasted the current setup with 2008 to 09 and 2018 to 19:

• Energy intensity of the economy has fallen nearly 60%.
• Services exports and remittances have tripled since 2018–19.
• Liquidity buffer of Rs 5 lakh crore, 11 months of import cover, and capex-to-GDP doubled to 3.2%.
• Even at $85 to 90 crude (base case) or $100 (adverse), fiscal and current-account impacts remain manageable.

He also notes that the rupee at 94 to 95 is undervalued, with fair value closer to 88 to 90.

Global Equities: Structural Shift Toward Non-US Markets and Resources

Tibrewal highlighted a structural shift in global equity leadership that has been building for months and is now gaining momentum. Non-US markets have started to outperform significantly over the last three and 12 months, with South Korea, Norway, Brazil, Thailand, Peru, Taiwan and other non-dollar assets leading. Ex-US outperformance is now at a three-decade high.

Within the US, the Magnificent 7 has begun to underperform, with only Nvidia and Google outperforming the rest of the group. The heavy concentration in these seven stocks means any sustained weakness is already weighing on the broader S&P 500. Sector leadership has rotated clearly toward energy, metals, consumer staples, utilities and industrials.

Tibrewal noted that "a large amount of global capital is moving to resources and hard assets" — a trend visible in the outperformance of Latin America (which made new highs versus the S&P since the war began) and the strength of the Brazilian Real — the best-performing major currency.