Indian equities are bracing for heightened volatility, with global brokerages warning that an escalation in the US-Israel-Iran conflict could push the Nifty below the 24,500 mark if hostilities drag on and
Bernstein, in a note, said a prolonged escalation in the Middle East could push the Nifty below its previously flagged downside level of 24,500. As brokerages expected,the larger concern is the macro impact of sustained higher oil prices and supply disruptions.
KEY HIGHLIGHTS
- Moody’s Analytics: Hormuz handles a third of global seaborne crude.
- Bernstein: Nifty risks falling below 24,500 if tensions persist.
- JM Financial: Every $1 rise in crude adds $2 billion to India’s import bill.
- Kotak Securities: Elevated Brent may squeeze OMC margins.
“Historically, market drawdown around geopolitical shocks have tended to be short-lived,” Bernstein said, but cautioned that this episode has “more direct channels into India’s economy.” A prolonged spike in crude could shave over 70 basis points off GDP growth if prices rise by $30 per barrel from current levels, it estimated.
Brent crude has climbed to around $80 per barrel following coordinated US-Israel strikes on Iranian targets and Tehran’s retaliatory missile and drone attacks, according to Moody’s Analytics. The agency warned that roughly a third of global seaborne crude and about 20 percent of LNG shipments transit the Strait of Hormuz, making Asian commodity importers particularly vulnerable.
India, the world’s third-largest oil importer, sources about half of its crude imports through the narrow strait. Moody’s Analytics said higher commodity prices would likely “raise consumer and producer inflation, potentially forcing central banks to pause their easing cycles or even raise policy rates,” while also inflating import bills and weakening currencies.
, noting that Brent has already moved to a seven-month high of around $80 per barrel. It is estimated that every $1 per barrel increase in crude raises India’s annual import bill by roughly $2 billion, adding pressure on the trade balance and the rupee. The brokerage said crude remains the key macro variable for Indian equities under the current escalation scenario.
Bernstein pointed out that India’s direct economic exposure to Iran is limited, but the broader regional fallout poses risks to oil flows, remittances from the Middle East, and infrastructure projects in the region. With 50 percent of India’s oil imports shipped through the Strait of Hormuz, any closure would be a “serious risk,” particularly for oil marketing companies.
Sumit Pokharna, VP Fundamental Research at Kotak Securities, said in a statement that Brent crude prices have risen to approximately US$80 per barrel and are expected to remain elevated in the near term, reflecting both supply-side risks and geopolitical premiums. He added that oil marketing companies are particularly vulnerable, as higher crude can compress refining margins, increase working capital requirements and lift borrowing costs.
While brokerages broadly expect initial weakness to be contained if tensions ease within days, they warn that a sustained conflict could trigger further equity downside, with inflation, fiscal pressures and currency weakness amplifying risks for Indian markets.
Sectoral impact: OMCs, aviation and paints in focus
Brokerages expect oil-sensitive sectors to bear the brunt of the volatility. Bernstein said it remains cautious on energy companies, travel and trade-linked names, and construction firms with meaningful Middle East exposure, citing risks from crude spikes and regional disruption.
JM Financial noted that upstream producers such as , while oil marketing companies face margin pressure if crude remains elevated.
Kotak Securities’ Sumit Pokharna said higher prices could compress refining margins and increase debt for OMCs. Aviation, paints and chemicals companies are also likely to see input cost pressures, while defence names may find some support amid heightened geopolitical tensions, according to JM Financial.