Will AI disruption and oil price shocks create bigger risks for Indian markets?

Rising tensions involving Iran, concerns over oil prices, slowing technology hiring, and the rapid adoption of artificial intelligence are creating a complex environment for investors globally. According to Prashant Mishra, founder and CEO of Agnam Advisors, the current phase requires investors to focus on discipline, diversification, and long-term structural trends instead of reacting emotionally to headlines.

Speaking about the Iran conflict and its impact on energy markets, Mishra said comparisons with historic oil shocks such as the 1973 Arab oil embargo or the Russia-Ukraine war may be overstated.

“This is a serious development, but not a reason to panic,” Mishra said.

He explained that tensions involving Iran are important because the Strait of Hormuz handles nearly one-fifth of global oil trade. Any disruption could trigger a sharp spike in crude prices. However, unlike earlier decades, the world today has stronger energy buffers through US shale production, strategic petroleum reserves, and slower oil demand growth due to electric vehicles.

For India, though, crude oil remains a major vulnerability. Since India imports around 85% of its crude requirements, even moderate increases in oil prices can pressure inflation, weaken the rupee, and widen the current account deficit.

Mishra said investors should learn to separate temporary market noise from long-term structural change.

“The key is to ask whether the event changes the earnings power of businesses over the next three to five years,” he said.

According to him, geopolitical events often create short-term sentiment shocks that markets eventually recover from. Structural changes, however, permanently reshape industries and business models. Artificial intelligence, he said, falls into the latter category.

Mishra believes India’s IT services sector is entering a permanent transformation phase because AI tools are automating coding, testing, and documentation tasks that were traditionally handled by large teams of junior engineers.

“This is a transformation rather than an extinction event,” he said, adding that large IT firms are likely to adapt successfully by integrating AI into their delivery models, while specialised AI-native firms could emerge as future winners.

The shift is already influencing employment trends. Campus hiring has slowed across parts of the technology sector, raising concerns among young professionals entering the workforce.

“Concern is justified, but fear is not helpful,” Mishra said.

He advised younger employees to focus on continuous learning, business understanding, communication skills, and the ability to work effectively alongside AI tools instead of competing with them directly.

Mishra also warned that slower technology hiring could eventually affect housing demand in cities such as Bengaluru, Hyderabad, and Pune, which have historically benefited from strong IT-driven employment growth. While he does not expect a sharp real estate correction, he believes property price appreciation could moderate in markets heavily dependent on technology hiring.

Given the uncertain backdrop, Mishra recommends focusing on sectors with resilient cash flows such as healthcare, renewables, infrastructure, and financial services. He also suggests maintaining exposure to high-quality debt instruments, selective real estate investments, and international diversification.

Gold, he said, continues to remain an important hedge against geopolitical uncertainty, inflation, and currency weakness, with a 10–15% allocation suitable for many portfolios.

“The investors who build lasting wealth are not those who predict every event correctly,” Mishra said. “They are the ones who maintain a sensible asset allocation, rebalance periodically, and stay focused on long-term goals.”