How Will the Israel-Hamas Conflict Affect the Indian Stock Market?

Analysts claim there is no immediate cause for alarm, but the issue is being carefully monitored because any conflict escalation might have a huge impact on Indian capital markets. The Israel-Hamas Conflict, a longstanding and complex geopolitical issue, has the potential to influence global financial markets, including the Indian stock market. Investors are closely monitoring this conflict due to its potential impact on global energy prices, regional stability, and investor sentiment.

A heightened risk environment can lead to increased market volatility, affecting asset prices and investor confidence. The specific outcomes for the Indian stock market may vary, underscoring the importance of investor vigilance. In response to shifting geopolitical events, staying informed and implementing diversification and risk management strategies is essential.

Impact of Israel-Hamas Conflict on Indian Stock Market

In line with other global stock indices, the Indian Stock Market opened sharply lower on Monday in response to the surprise multifront attack on Israel by the Palestinian militant group Hamas, intensifying the Israel-Hamas Conflict. This conflict has resulted in over 1,000 fatalities and has sparked increased geopolitical tensions, rising crude oil prices, and turbulence in the world stock markets.

On Monday, the NSE Nifty dropped over 100 points or 0.52 percent to 19,552.20 while the benchmark BSE Sensex dropped over 337 points or 0.51 percent to 65,656.71.

Analysts say there isn’t a reason to panic right now, but the situation is being closely watched because any military escalation may have a big impact on Indian stock markets due to a spike in oil prices and increased volatility in the currency and bond yields.

Crisis in Israel and Implications for Oil Prices and Stock Markets

The top 35 companies listed on the Tel Aviv Stock Exchange are tracked by Israel’s benchmark TA-35 Index, which fell 6.47 percent on Sunday.

According to Palka Arora Chopra, Director at Master Capital Services Ltd, more volatility and rising geopolitical risk could result in an increase in oil prices. The potential for a lasting decline in oil supplies could have a significant and enduring impact on oil markets.

Santosh Meena, Head of Research at Swastika Investment, highlights the Israel-Hamas Conflict as an unexpected event with potential market effects. While immediate effects may not be clear, monitoring is crucial due to the involvement of nations like Iran. The prospect of Iran joining as a third front is a significant concern, as it could lead to a rapid surge in crude oil prices. The evolving geopolitical landscape underscores the need for vigilance in the financial markets.

Crude Oil Prices Surge: Implications for Inflation and Interest Rates

“From a technical perspective, the demand zone between 19300 and 19250 is crucial. The market is expected to move sideways, seeking stability within this range, with a notable barrier at 19800. A breach below 19250 would trigger a healthy correction that could go as low as 18800, according to Meena.

He encouraged short-term traders to proceed cautiously and avoid making quick choices. While a significant decline may present long-term investors with a fantastic buying opportunity.

The price of US WTI crude oil increased 5.1% to $87.02 per barrel. Early today, the price of Brent crude futures increased by more than 5% to $44.76 a barrel.

Rising crude oil prices may impact domestic inflation and lead to prolonged high-interest rates. Due to increased bond yields, FIIs are consistently selling, and high crude oil prices may cause additional problems. The nature of the conflict should be monitored because its prolonged nature may have a significant effect, according to Arora.

According to her, it’s crucial to closely monitor industries like paint and chemicals in the stock market. They are expected to experience both immediate and medium-term impacts on their profit margins.

Stock Market Panic Amid Israel-Hamas Conflict: A Shift Towards Safe-Haven Assets

Anita Gandhi of Arihant Capital has noted that the unexpected Hamas attack has brought Israel-related stocks into global focus, intensifying the impact of the Israel-Hamas Conflict. Companies with stakes in Israel, including Taro Pharmaceutical, Dr. Reddy’s, Lupin, Torrent, and Sun Pharma, may face market fluctuations. Furthermore, companies like NMDC, Kalyan Jewellers, TCS, Infosys, Tech Mahindra, and Wipro, operating in Israel, may experience market impacts. The conflict’s ripple effects are extending to various sectors and companies.

Sun Pharma shares at Rs 1,123.90 fell by 0.30%, Lupin by 0.51%, Torrent Pharma rose by 0.36%, and Dr. Reddy’s climbed 1.51% on the NSE.

These events have stirred panic in the market, leading to a significant increase in the demand for safe-haven goods. This surge in demand has propelled the prices of many commodities during the morning trading session.

Sarvjeet Virk, Co-Founder & MD at Finvasia, highlights that investors tend to favor precious metals during global unrest for safety. However, they do not give up on stocks. This belief stems from the expectation that if stability is restored, stock performance will improve.

Economic growth is still strong from the standpoint of the Indian market. Any market reversal could be viewed as an opening by investors.