Experts warn that IT, infrastructure, and oil stocks will be most impacted if Israel-Iran tensions continue.
The Israel-Iran conflict has escalated tensions in the Middle East, affecting markets worldwide, including India’s. Following airstrikes between Tehran and Israel, there was significant selling pressure in global markets last week.
Experts believe that Indian companies with direct ties to the Middle East, especially Iran, will face the most significant challenges. Oil companies like Bharat Petroleum, Indian Oil, Hindustan Petroleum, and ONGC will likely suffer the most from rising crude oil prices. Additionally, firms like Adani Ports, TCS, Tech Mahindra, Infosys, Wipro, and Larsen & Toubro will also feel the impact, as they depend on business from Middle Eastern countries.
Iran-Israel War: Impact on Indian Companies
Anshul Jain, Head of Research at Lakshmi Shree Investment and Securities, discussed the effects of the Israel-Iran conflict on the Indian stock market. He stated that the war is likely to impact several prominent Indian companies that rely heavily on business from Israel and other Middle Eastern nations. The sectors most affected include IT, infrastructure, and oil production.
The conflict is expected to impact the business interests of major players like Tata, Gautam Adani, and Anand Mahindra.
IT Stocks in Focus
Manish Chowdhury, Head of Research at StoxBox, highlighted the impact of the Israel-Iran conflict on companies with ties to Israel. IT giants TCS and Infosys have significant operations in the country that emphasize innovation and collaboration. TCS has initiated the Open Innovation program with Jaguar Land Rover in Tel Aviv to engage with local startups and develop innovative mobility solutions as part of JLR’s Reimagine strategy, leveraging TCS’s COIN platform. Meanwhile, Infosys operates in Israel through its subsidiary Panaya Ltd. Both companies recognize that geopolitical and macroeconomic factors can affect service demand, with TCS deriving 2.1% of its revenue from the Middle East and Africa.
Gautam Adani Also Affected
In the infrastructure sector, companies like Adani Ports are facing pressure due to the Middle East crisis. The StoxBox expert noted that Adani Ports gained attention recently as it operates Haifa Port, Israel’s largest port, which offers access to the busy Mediterranean and expansion opportunities in the region. The company holds a 70% stake in Haifa Port.
Anshul Jain from Lakshmi Shree Investment and Securities highlighted that Larsen & Toubro also has a significant presence in Israel. The ongoing Iran-Israel conflict could adversely affect the company’s upcoming quarterly results.
Oil Stocks to Watch
Anshul Jain noted that it has been about a year since the Israel-Hamas war began, and tensions have now spread to Iran. This situation is putting pressure on oil companies due to rising crude oil prices.
If the Israel-Iran conflict continues, significant challenges are likely to confront companies like the Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), and Oil and Natural Gas Corporation (ONGC).
Investors should watch oil and gas companies in India, like IOC and BPCL, due to potential supply issues from rising tensions in the Middle East. Higher crude oil prices could hurt their profits and raise fuel costs, impacting the aviation sector. If the conflict between Israel and Iran continues, these 10 Indian stocks may face pressure: TCS, Infosys, Wipro, Tech Mahindra, Adani Ports, Larsen & Toubro, IOC, BPCL, HPCL, and ONGC.
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