Indian stocks likely to face the heat amid Iran-Israel tension flare up
Upstox
2 min read • Updated: April 15, 2024, 5:47 PM
Summary
The escalating tensions in the Middle East bolstered the US dollar and US Treasury yields sucking out funds from emerging markets and riskier assets. Even as broader markets saw a knee-jerk reaction due to mounting tensions in the Middle East, many Indian stocks or sectors are likely to be directly impacted due to Iran's attack on Israel.
Market benchmarks indices SENSEX and NIFTY tanked nearly 1% on Monday, April 15, in line with global equity losses due to geopolitical concerns after Iran’s missile attack on Israel.
NIFTY dropped to 22,270 level while 30-share index SENSEX touched a low of 73,315.16 due to selling in banking as well as leading FMCG and IT shares.
The escalating tensions in the Middle East bolstered the US dollar and US Treasury yields sucking out funds from emerging markets and riskier assets.
Even as broader markets saw a knee-jerk reaction due to mounting tensions in the Middle East, here is a list of stocks or sectors that are likely to be directly impacted due to Iran's attack on Israel.
Oil marketing companies
An increased tension in the Middle East and a potential strict ban on Iran can drive up the oil prices in the global market. Higher crude oil prices would hit Indian oil marketing companies such as IndianOil, BPCL and HPCL. OMCs may face pressure on marketing margins and see working capital requirements going up. HPCL, IOC, Adani Total Gas and BPCL declined up to 3% on Monday.
Tyre stocks
A hike in crude oil prices would also hit tyre shares as the industry uses crude oil derivatives for making synthetic rubber. Tyre shares MRF, Apollo Tyres, JK Tyres, CEAT, Goodyear India and Birla Tyres could face the heat of the conflict. MRF, Goodyear and Apollo Tyres dropped up to 2% on Monday.
Paint stocks
Paint stocks such as Asian Paints, Berger Paints, Indigo Paints, Akzo Nobel India and Shalimar Paints may see some pressure if the crude oil prices rise in near future. Crude derivatives account for around 40% of the input cost for paint manufacturers.
Adani Ports
Facing the heat of flared-up tensions, Adani Ports & SEZ shares dropped more than 2% to hit a low of ₹1,308.60 on NSE. Adani Ports & SEZ recently acquired the Haifa port in Israel for USD 1.03 billion. The company runs the Haifa port with a local partner. An escalated war could make critical infrastructure like ports a potential target.
Sun Pharma
Sun Pharmaceuticals has an Israel-based arm Taro. A large-scale conflict could impact its production. Sun Pharma was trading lower 0.45% at ₹1,533 apiece on Monday, extending losses for a second straight day.