Escalating geopolitical tensions in the Middle East are casting a long shadow over Indian companies’ bottom lines. According to Kotak Institutional Equities, if the Israel-Iran standoff extends beyond a few weeks, input costs will surge across industries, potentially slashing corporate revenues.
India’s economy, heavily dependent on crude imports, faces amplified risks from spiking global energy prices. The report flags this as one of the gravest macroeconomic threats, with potential to balloon the current account deficit and unsettle financial markets.
Investor jitters are evident: Foreign portfolio investors dumped ₹3,752.52 crore in Indian equities on Thursday. In contrast, domestic players bought ₹5,153.37 crore worth, underscoring their faith amid volatility.
Despite these headwinds, factors like robust local investment flows and India’s structural growth drivers could cushion the markets. However, the brokerage emphasizes sustained Middle East disruptions—particularly in oil supply—as the primary downside risk.
Sectors from petrochemicals to transportation are in the crosshairs, with higher fuel expenses set to compress margins. As the conflict unfolds, corporate India must navigate this energy crisis, balancing cost escalations against resilient demand and policy responses.