Dalal Street: The confrontation between Iran and Israel may extend to Dalal Street

Mumbai: Indian stocks could weaken on Thursday as escalating hostilities between Iran and Israel are seen as keeping investors nervous. However, the downsides could be limited as global markets bear the brunt of the impact. geopolitical tensions calmly, with the expectation that the skirmishes will not turn into a full-blown war involving global powers, including the United States.

Indian markets were closed on Wednesday. Elsewhere in Asia, South Korea was down 1.2% and Japan was down 2.2%. Taiwan rose 0.75% and Hong Kong jumped 6.2%, maintaining its new bullish momentum, boosted by China’s stimulus package to revive its economy. Mainland Chinese markets were closed. On Wednesday, US markets They rose slightly but were near two-week lows. The S&P 500 rose 0.14% and the Nasdaq Composite rose 0.32% at press time.

Brent Crude
“Wall Street fell on Tuesday, but not by much, and other global markets have also been fairly stable, indicating they don’t expect things to get worse from here despite the geopolitical challenges,” said Andrew Holland, director Avendus Capital Public executive. Alternative market strategies. “We don’t think Indian markets will react very adversely either, and although we may see a lower opening, we expect some recovery during the day.” December Brent crude oil futures erased some of the early gains and rose almost 0.6% on Wednesday to $74. a barrel when the likelihood of a broader conflict arose following Iran’s missile attack on Israel in response to the assassination in Tel Aviv of Hezbollah leader Hassan Nasrallah. Hezbollah, a militant group, is backed by Iran. While Iran insisted it has “no interest in a broader war” after the attacks, Israel has vowed to fight back.“Iran’s decision to respond to Israel’s devastating attacks on its proxy Hezbollah, including a new ground offensive, with a ballistic missile attack on Israel, increases the risk of a broader regional conflict that could draw in the United States and upend oil markets,” Evercore ISI, an investment banking advisory firm, said in a client note.

Gold was trading lower after rising more than 1% on Tuesday in response to the Iran attack. The pan-European Stoxx 600 index was trading flat when it was released.

“Indian markets are likely to see a moderate impact, mainly depending on how the US markets close on Wednesday,” said Aamar Deo Singh, senior vice president of research at Angel One.

chinese factor
The biggest concern for investors in India would be the resurgence of Chinese stocks, which have underperformed in recent years, after the government announced a series of economic stimulus measures last week. Global investors had been pumping money into India lately at the expense of China. Now, as analysts predict the rally in Chinese stocks could sustain, they see some money flowing out of India and into China.

“The latest stimulus package marks a pivotal moment for the country’s economic trajectory and equity markets,” Victoria Mio, head of Greater China equities and portfolio manager Janus Henderson, said in a note. “As global investors seek stability amid uncertainty, the Chinese government’s decisive pivot from debt control to supporting growth could be the catalyst needed to restore confidence and unlock value in China’s markets.” .

China’s SSE Composite index, which rose 8% on Tuesday, has gained more than 15% in the past week.

“Chinese markets have seen a huge rise initially due to short covering, but now that investor skepticism about their policies is waning, there has been heavy buying,” Holland said. “Some of India’s outflows may have been directed toward China to avoid missing out on the strong rebound.”

Foreigners have withdrawn Rs 15.37 billion from Indian stocks in the previous two trading sessions.

Netherlands said global interest rate cuts will be beneficial for everyone emerging marketswhile specifically for India, investors will now look at the upcoming earnings season. “We don’t think (second quarter results) will be great, and with GDP forecasts falling and government spending not picking up, there may be some volatility in the coming days,” Holland said.

Sectors affected by crude oil prices, such as oil marketing companies, paint manufacturers, oil explorers and others, are likely to be in the spotlight on Thursday, along with metals due to Chinese policy measures.