Impact of Israel-Hamas Conflict on Indian Stock Market

Impact of Israel-Hamas Conflict on Indian Stock Market

The Indian stock market watches nervously as the Israel-Hamas conflict creates ripples of uncertainty. But what’s next?

The Israel-Palestine dispute is a longstanding conflict, but the current situation has reached an appalling state. On the morning of October 7, Hamas militants launched over 5,000 rockets at various areas of Israel. In response, Israeli Prime Minister Benjamin Netanyahu initiated military action.

In times of war, pandemics, or geopolitical tensions, stock markets often experience volatility. During crises, people become more cautious about their financial situation, leading to uncertainty in investments. Additionally, such crises can have varying effects on different sectors of the market, resulting in losses in some areas and profits in others.

In this article, we will explore the potential impact of the ongoing conflict between Israel and Hamas on the Indian stock market. 

Let’s begin.

What’s Happening?

The ongoing conflict between Israel and the Palestinian group Hamas has impacted global markets, including India. 

During early trades on Monday, October 9, 2023, according to a report from Business Line, during the early trading session on Monday, the BSE Sensex dropped by 466.35 points to 65,529.28, while the NSE Nifty also fell by 142.25 points to 19,511.25. 

Some companies like ONGC, HCL Tech, TCS, Infosys, and Nestle performed well, but others like BPCL, Tata Steel, Adani Ports, Adani Enterprises, and UPL saw declines. However, there was a slight recovery in the market after a few hours, compared to the initial drop. 

Meanwhile, global markets showed mixed trends during early trading. Crude oil prices rose, and safe-haven assets like gold also saw a 1.2% increase in value.

Rise in Crude Oil Prices

The tension between Israel and Hamas has also impacted crude oil prices. After experiencing a significant drop last week, the price of Brent crude oil has seen an increase. According to the Economic Times, there was a jump of over 4% in crude oil prices. It is important to note that there was a decline in crude oil prices last week, but the ongoing developments between Israel and Hamas have reversed that trend. Additionally, the conflict between Israel and Hamas has also had an impact on oil companies.

What is the Likely Impact on Business?

The ongoing conflict between Israel and Hamas has the potential to seriously impact operations at Israel’s three largest ports: Haifa, Ashdod, and Eilat. These ports manage a diverse range of cargo, like agricultural goods, chemicals, electronics, machinery, and automobiles. India’s trade with Israel primarily flows through the port of Eilat on the Red Sea. According to Business Line, Ajay Srivastava, a former Indian Trade Service officer and the founder of the Global Trade Research Initiative, has mentioned that, fortunately, there have been no reports of disruptions at the Eilat Port thus far. India’s trade with Israel amounted to approximately $10.7 billion in FY23.

What’s Next?

According to Business Today, VK Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, has emphasised that it is still uncertain how far the Israel-Hamas conflict will escalate. From a market perspective, it is crucial to note that, currently, there is no significant disruption in oil supply. However, if Iran becomes involved in the conflict, the situation could worsen because Iran is a major supporter of Hamas. This could have repercussions for major oil-importing countries like India.

Furthermore, market analysts suggest that due to the global uncertainty stemming from this conflict, investors are becoming cautious and reluctant to take risks. Concerns like these may lead foreign portfolio investors to increase selling in emerging markets like India. However, the actual impact of these conditions on the Indian markets will depend on how long the conflict lasts and its intensity.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

*The companies mentioned are for information purposes only. This is not an investment advice.


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