Iran-Israel war impact on share market: Indian stock market, which is at all-time high levels, may see a big selloff on Monday. Because stock market investors are worried about the consequences of Iran’s military attack on Israel with more than 300 drones and missiles. On Friday, the Sensex had fallen nearly 800 points as FPIs were net sellers of nearly $1 billion due to changes in India-Mauritius tax treaty and higher than expected inflation rate in the US. Analysts say that this selling will continue on Monday also.
Crude oil can cross 100 dollars
Firstly, the markets are at dangerously high all-time levels. The market is waiting for some reason to strengthen. On the other hand, geopolitical tension arising from the Iran-Israel war can bring the market to its knees. Tension in the Middle East may have the biggest impact on crude oil prices. Oil prices hit a six-month high last week on worries Iran would retaliate against a suspected Israeli warplane attack. Now after the fears have turned into reality over the weekend, analysts fear that crude oil prices, which closed near $ 90 per barrel on Friday, may cross the $ 100 level in the next few days.
The biggest risk on the supply chain
Supply chain issues remain the biggest risk, as Iran follows through on its threat to close the Suez Canal. High commodity prices are quite dangerous for inflation. Even the much-awaited rate cut cycle may be delayed. According to experts, the timing and quantity of the rate cut is going to be one of the major triggers for the market.
inflation will increase
Not only crude oil, but in recent times the prices of many other commodities like gold, silver, copper etc. are also increasing. Due to this, there is a possibility of increase in inflation across the world. If this happens, the central bank will not be able to reduce interest rates. They can also increase the interest rate. This will make borrowing expensive for companies and customers. This will reduce the profits of companies and affect the stock market.
What should investors do?
Various experts say that investors should reduce their investments in risky smallcaps and midcaps and turn to quality largecaps. Analysts expect further FPI outflows from India due to rising geopolitical tensions and rising bond yields.
(This is information only. This is not investment advice. The stock market is risky. Consult your investment advisor before taking any decision.)
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