Trump’s Iran war end timeline: What it means for stock market investors

The US President Donald Trump suggesting a two-three week timeline to end Iran war has raised market hopes, despite several conflicting and mixed messages over the past couple of weeks.

The timeline, Kotak Institutional Equities said, reflects the achievement of the strategic objectives of the US with respect to the degradation of the military and nuclear infrastructure of Iran. On the other hand, it could also be the assessment of the US’s position or the negative economic and political fallout of a possible ‘endless’ war. 

Either case, Kotak said the statements of the POTUS have improved the odds of its base case scenario playing out, which suggests the conflict continuing for a few weeks, with  elevated tensions for the next few months. Kotak in its base case sees reopening of the Strait of Hormuz over the next few weeks and no long-lasting damage to oil & gas infrastructure in the West Asia. 

"Our base case scenario entails elevated oil prices for the next few weeks and a decline in oil prices after ‘normalisation’ in supplies from the Middle East to a ‘high’ plateau," it said. 

Nomura in another note said the Trump administration has provided yet another signal that it wants to end the war. It cited a WSJ report, which earlierclaimed President Trump is willing to end the war even if the Strait of Hormuz remains shut. This was followed by another overnight comment from Trump, saying that the US will “leave” Iran within “two to three weeks”.

"He also further indicated that an agreement with Tehran was not necessary for the war to end. While this is not the first time the US Trump administration has indicated the war may end in “few weeks”, clearly, indications are that the US feels an increasing need to withdraw from the war due to various pressures," Nomura said.

Kotak said the negative news cycle of the past few weeks with respect to the war and consequent supply disruptions appears to have hypnotized market participants into extrapolating the current negative environment in perpetuity or for a long time, based on the sharp fall in stock prices across caps, sectors and stocks since the start of the war. 

"The reward-risk balance has improved across more parts of the market, given the correction in valuations of the market and in many sectors and stocks," it said.

Kotak said it sees limited earnings downgrades for FY2027 and FY2028 if the US-Iran war ends within the next 2-3 weeks and oil & gas supply conditions improve over the next few months. It noted that the government has largely isolated Indian consumers and companies from the negative impact of higher retail oil prices for now. 

"We would worry more about weaker-than-normal monsoons due to potential El Nino conditions and fertilizer shortages, which could result in a subpar summer crop. India has a reasonable food-grain buffer," it said.