West Asia tensions rattle Dalal Street; pharma and metals buck the trend

The escalating conflict in West Asia has triggered investor anxiety in India, leading to a decline in most sectoral indices on Dalal Street on Monday, with the exceptions of the pharmaceuticals and metals sectors. The ongoing geopolitical tensions are expected to negatively impact export-oriented industries and those reliant on crude oil, particularly as trade routes like the Strait of Hormuz become increasingly affected. Oil and gas companies, especially those in downstream operations such as Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL), are particularly vulnerable to price hikes, with HPCL and BPCL shares dropping 3.3% and 2.8%, respectively. Conversely, upstream firms like ONGC and Oil India saw gains due to rising crude prices. Brent crude futures surged more than 8%, reaching $78.8 per barrel. Analysts predict that while the situation is currently volatile, it is unlikely to destabilize India's economy in the long term. Sectors such as tourism and aviation are also feeling the strain, with companies like IndiGo and SpiceJet witnessing declines of around 6% as flight cancellations and increased costs loom. The specialty chemicals sector is similarly affected, with major companies reporting declines in stock value due to rising input costs linked to crude oil. Overall, the market's reaction underscores the broader implications of international conflicts on local economies.