Escalating oil prices triggered by Israel-Iran hostilities are set to dent profits for Indian companies, with input costs surging across industries. Kotak Institutional Equities’ latest report flags this as a major headwind, predicting revenue dips if the conflict drags on.
India’s economy, heavily dependent on crude imports, stands exposed. High energy prices threaten to widen the current account deficit and unsettle markets, the report states. Brokerage experts point to sectors like manufacturing and transportation bearing the brunt, as raw material expenses climb.
Market jitters were evident Thursday, with FIIs selling off Rs 3,752.52 crore in Indian stocks. Contrasting this, domestic institutional investors (DIIs) bought Rs 5,153.37 crore worth of equities, underscoring resilient local confidence.
Despite these supports, geopolitical developments loom large. Kotak emphasizes monitoring oil supply disruptions from the Middle East, which could prolong the crisis beyond expectations and amplify economic risks.
The report underscores India’s sensitivity to global oil volatility, positioning an energy crisis as one of the gravest threats in the current environment. Medium-term growth drivers and stable domestic flows may cushion blows, but short-term volatility persists.
Businesses are advised to scrutinize cost structures and explore alternatives amid this uncertainty. As Brent crude hovers at multi-month highs, the ripple effects on inflation, trade balances, and corporate earnings demand vigilant oversight from policymakers and investors alike.