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Effect On the Indian Stocks
The ongoing Israel-Palestine conflict has the potential to cause a significant surge in crude oil prices, which could, in turn, impact the stock prices of companies such as Oil India, Mahanagar Gas, ONGC, and Castrol India.
In the aftermath of the Israel-Hamas conflict on Monday, the Indian stock markets displayed resilience, avoiding any panic-driven sell-offs. However, the escalating tensions in the Middle East have drawn attention to various Indian companies with ties to Israel or operations in the conflict-affected region.
Also Read | Escalating Tensions in the Israeli-Palestinian Conflict 2023: A Deep Dive |
Indian Companies Majorly Affected By The Isreal-Palestine Conflict
- Sun Pharma’s shares may face downward pressure due to its subsidiary, Taro Pharmaceuticals, being based in Israel. Taro Pharma has expressed concerns about potential disruptions to its business caused by terrorist acts. Other major pharmaceutical companies like Dr. Reddy’s, Lupin, and Torrent Pharma also have exposure to Israel through their export activities.
- Tata Consultancy Services (TCS) is involved in several significant projects, including government contracts, in Israel. The IT giant employs over 1,000 workers in the country and is actively monitoring the safety of its employees currently stranded in Israel.
- Adani Ports, which operates the Haifa port in Israel, experienced a nearly 5 percent decline in its stock on October 9. The Adani Group-owned company has stated that it is closely monitoring the situation on the ground and has a business continuity plan in place. Haifa’s contribution to APSEZ’s overall cargo volume is relatively small, at 3 percent.
- Oil marketing companies (OMCs) such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation, and Bharat Petroleum Corporation Limited are drawing increased attention due to the heightened geopolitical tensions, which have the potential to result in disruptions in crude oil supply from the Middle East.
Impact On Price
The Israel-Palestine crisis has the potential to trigger a substantial rise in crude oil prices, affecting related stocks such as ONGC, Oil India, Mahanagar Gas, and Reliance Industries. Additionally, Castrol India, known for its production and distribution of automotive and industrial lubricants, may experience some market movement.
When crude oil prices surge, the paints sector faces significant challenges, as crude oil derivatives are key components in paint production. These companies have limited control over these input costs. The Israel-Hamas conflict has the potential to sustain higher crude oil prices over an extended period, which could negatively impact companies like Asian Paints, Berger Paints, IndiGo Paints, and Kansai Nerolac Paints.
Furthermore, businesses like NMDC, Kalyan Jewellers, Infosys, Tech Mahindra, and Wipro, which have operations in Israel, might also witness effects on their market performance.
Conversely, the stock of Archean Chemicals could potentially experience a positive upswing as a result of the ongoing Israel-Palestine conflict. This conflict is anticipated to lead to an increase in bromine prices due to the expected reduction in bromine production in the Dead Sea region, which borders Israel and Jordan. IIFL Securities suggests that this scenario may present a favorable opportunity for other bromine producers, including Archean Chemicals.