On Saturday, October 7, that controls the Gaza Strip massively attacked 5000 rockets over Israel. A deadly sudden attack on Israel destroyed their military base, and Hamas militants killed and captured hundreds of soldiers and citizens. This article will explore Israel-Hamas War: 10 Key Impacts on Indian Stock Market
Due to this conflict, the world has been affected badly and is now facing a second war with the Russian-Ukraine, which is continuing. The crude oil price and the stock market have been affected worldwide.
On Monday, the Indian stock market has been affected and may open on its lower. The fund manager stated that the impact on the Indian stock market showed a surge in Crude oil prices and promoted volatility in the rupee and bond yields since the Saturday conflict.
10 Key Impacts on Indian Stock Market
As we explore the intricate world of the Indian stock market, we uncover 10 key impacts that have left a significant mark. From global events like the Israel-Hamas war to domestic factors, each element uniquely shapes the market’s fortunes.
1. Global Markets React: India Follows Suit
The Indian stock market opened on Monday at its lowest point due to Israel-Hamas, which started this Saturday. Some fund managers have considered some analyses for the investor and guided them to follow.
2. Oil Prices and Rupee Volatility
While experts don’t foresee immediate panic, they’re closely examining how the war situation develops. If the conflict widens, it could significantly affect Indian stocks due to rising oil prices and increased uncertainty in the rupee and bond markets.
3. Expert Opinions: Insights from Fund Managers
The top 35 companies listed on Israel’s TA-35 Index in the Tel Aviv Stock Exchange have seen a notable decline of 6.67% on the particular Sunday. Similarly, in India, there is also sad news for the investors in both the Nifty and Sensex. It was trading around 3% down compared to mid-September.
Small and mid-cap companies’ downfall is still the same, dropping from 2 to 3.5 % below their actual level. On the other hand, It’s a good time for others, like Foreign Investors, to involve themselves in selling activities.
Samir Arora, a Helios Capital Management fund manager, highlighted the market’s increasing nature and recommended scanning it. They added that investors pause for a few days before making any investment.
4. Commodity Market Trends: Metals and Oil in Focus
Samir Arora stated ahead of the Ukraine and Russia war in February last year when he decreased his fund’s net long nature by 15%. But this time, he won’t say anything instantly. Organization of the Petroleum Exporting Countries OPEC addressed a meeting last year on February 5, where they dropped Crude oil prices by 9 % from the actual price.
Now, Brent is trading at $86.29 per barrel. But if the Israel-Hamas war continues, it is a concern because the standout of Israel over Hamas is warning to destroy completely.
5. Dollar and Gold: Safe Haven Investments Amidst Uncertainty
Shiv Sehgal, president and head of Nuvama Capital Markets, said that our market may be down, but we can recover by the end of the day. But we have to assume that the market can be volatile in the upcoming days and will impact metals and crude oil commodities.
However, Hamas would not consider how badly it would be affected by this retaliation. If the war continues, it will also influence the upcoming state election.
6. Crude Oil Forecast: Short Covering Rally Possibility
Like investors in a game of chess, hedge funds with short bets on WTI crude oil could spark an oil rally as they buy back their positions. A recent report dated October 3 revealed that these funds had a total of 27.38 million barrels on the line in WTI futures trading.
Notably, other market players, the “others,” seemed optimistic, holding a substantial 72.6 million barrels in long positions. This delicate balance of moves and countermoves in the oil market keeps it unpredictable, much like a strategic game.
7. Foreign Portfolio Investors (FPIs) and Their Role
According to Gnanasekar Thiagarajan, director of Commtrendz, the WTI crude oil price range has been between $77 and $88. However, if the war expands, we might witness a rally due to short covering. Nilesh Shah, managing director at Kotak Mahindra Asset Management Co., points out that risk-averse foreign investors could shift to safer assets like the US dollar and gold if the conflict escalates.
Despite this, the rupee remains relatively stable, closing at 83.24 to the dollar, just 5 paise away from its record low of 83.29 from last October.
Also, read How To Study Medicine in USA & Become Expert: Full Guide
8. OPEC’s Role: Balancing Act with Oil Prices
India heavily relies on importing 85% of its needed crude oil. If the dollar strengthens significantly, it could lead to more dollars leaving the country, weakening the rupee and making exports more expensive. Foreign portfolio investors (FPIs) previously injected ₹1.69 trillion into Indian stocks, contributing to record market highs.
However, with rising US bond yields, FPIs sold ₹14,768 crore in stocks. Domestic institutional investors absorbed these sales, while increased US bond yields prompted FPIs to redirect funds to safer US treasuries.
9. Market Outlook: Short-Term Impact and Long-Term Recovery
OPEC countries are cautious about pushing oil prices beyond a 10-12% increase due to their agreement with the US to maintain certain price levels.
According to Deven Choksey, managing director of KR Choksey Shares and Securities, oil prices may experience a 10-12% surge in the immediate aftermath of this attack. He also predicts a potentially lower market opening on Monday but anticipates a later recovery.
10. Options Data Analysis: Projected Nifty Range
Options data suggests that the Nifty may have a limited range, around 19,550-19,750, this week, as of last Friday’s data. But keep in mind, this might shift due to global developments related to the Israel conflict.
Conclusion
In conclusion, the Israel-Hamas war has left its mark on the Indian stock market. While there’s no need for immediate panic, keeping a watchful eye on how things unfold is vital. Concerns linger about oil prices, currency values, and commodities like metals and oil. Experts have different views – some are cautious, while others see a potential oil rally.
Foreign investors and OPEC decisions will influence market direction. Staying informed and adjusting strategies is crucial as the situation evolves. The short-term outlook is uncertain, but recovery is possible, with Nifty data offering guidance. In this challenging landscape, being alert and adaptable is critical for Indian investors.