2024-10-03 02:11:24
New Delhi: There is a possibility of turmoil in the Indian stock market due to increasing tension between Israel and Iran. On Tuesday night, Iran fired several missiles at Israel. This was the second attack this year. Earlier on April 13, Iran had also attacked Israel. Due to this tension, the prices of crude oil have increased. The possibility of supply disruption has increased. India, being the world’s third largest oil importer, will be most affected by the rising prices of crude oil. The stock market remained closed on Wednesday, October 2 due to Gandhi Jayanti. But, when the market opens on Thursday, the effect of this tension can be seen.
According to Reuters, Brent crude futures rose 83 cents, or 1.13%, to $ 74.39 per barrel. US West Texas Intermediate (WTI) crude rose 88 cents, or 1.26%, to $70.71 a barrel. Both crude benchmarks were up more than 5% in trading on Tuesday.
Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies at Angel One, said, ‘There has been an increase in attacks by Israel on Iranian-backed forces in the region. After this, crude oil prices are expected to rise due to increasing concerns about possible supply pressure from Middle East producers.
What effect will rising oil prices have on India?
Rising oil prices are a matter of concern for India. Being a consumer country, any increase in prices raises concerns about inflation rate and its impact on the economy. Higher oil prices could increase transportation and production costs. Many areas may be affected by this. Consumer spending and economic growth could potentially slow.
Experts say that if tensions flare up and Iranian oil supplies are affected or other oil producing countries also jump into the conflict, oil prices will also increase. India is a big importer of oil. Due to this, its current account deficit may be seriously affected. It is believed that a $10 increase in oil prices reduces our GDP by 0.5%.
Which shares will be affected?
According to SEBI-registered investment advisor Gaurav Goyal, the biggest loss will be to oil marketing companies like BPCL, HPCL, IOC.
On the other hand, companies like ONGC which are involved in production and exploration will benefit. Allied sectors like paints and aviation will also suffer. The festive season is near in India. This may dampen the enthusiasm of companies like Asian Paints, Nerolac, Berger Paints, Indigo and SpiceJet. Let us know here which stocks will be directly affected by Israel-Iran tension.
1. Adani Ports
Adani Group’s Adani Ports and Special Economic Zone owns the port of Haifa in northern Israel. It completed the purchase in January 2024 for approximately $1.03 billion. The port is operated in partnership with a local company. However, the port has not yet been affected by the ongoing conflict. But, rising tensions could threaten Israel’s infrastructure like this port.
2. OMC Stock: HPCL, BPCL, Indian Oil, Oil India
The renewed conflict between Iran and Israel is likely to impact oil marketing companies (OMCs) such as Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Oil India Limited (OIL). . OMCs may face rising input costs. If they are unable to pass these costs on to consumers, their profit margins may be reduced.
3. Paint Stock: Asian Paints, Berger Paints, Akzo Nobel, Indigo Paints, Nerolac
A rise in oil prices means a rise in input costs for sectors like paints that depend on it. Stocks of paint companies like Asian Paints, Berger Paints, Akzo Nobel, Shalimar Paints, Indigo Paints and Kansai Nerolac are largely dependent on crude oil prices.
4. Aviation Stocks: InterGlobe Aviation, SpiceJet, Jet Airways
Since fuel is the major cost for airlines. Therefore, rising prices may reduce profit margins for Indian carriers. This could potentially cause their share prices to decline.
Airlines may also face operational challenges. Particularly if airspace in the region becomes restricted or if there are concerns about the safety of flights traveling near conflict areas.
(Disclaimer: The recommendations given in this analysis are those of individual analysts or broking companies and not of NBT. We advise investors to consult certified experts before taking any investment decision as stock market conditions can change rapidly.)