Iran-Israel conflict is a pain in the ass for stock market investors, but there is a way out

Tensions in the region Middle East This has been compounded by the escalating conflict between Iran and Israel, raising concerns about a potential wider regional crisis. If the conflict worsens, the impact on global crude oil prices could be significant due to Iran’s role as a key oil producer. Although crude oil prices are currently stable, any sharp increase could disrupt central banks’ rate-cutting strategies. Inflationary pressures from rising oil costs could hinder economic recovery efforts, especially in emerging markets such as India, which imports 80 percent of its oil. This scenario could negatively impact investor sentiment and worsen existing economic challenges.

indian market It is already in a correction phase, driven by a stronger dollar index. Donald Trump’s 2024 US Presidential election victory. The ongoing tensions in the Middle East increase the negative sentiment in the market and cause investors to turn to safer assets such as bonds and gold.

This week alone, Indian indices lost over 2.5 percent and finished in the red for the second consecutive week. By the way, so far for November Nifty50 It has lost 2.7 percent so far, following a 6.2 percent drop in October. It was also down more than 10 percent from its record high in September.

As the Middle East crisis continues, industry leaders share their insights on how Indian investors can protect their portfolios from potential economic shocks. Although the situation brings both risks and opportunities, understanding the consequences is vital.

As this conflict continues, here’s how experts recommend positioning your portfolio.

Choice Broking Vice President Jathin Kaithavalappil noted increased market volatility and its potential spillover effects on investor sentiment. “To protect portfolios, it is important to try to expand investment horizons to include high-quality portfolios.” large cap stocks and defensive sectors that can withstand sudden corrections,” Kaithavalappil suggested.

Religare Broking Ltd. Senior Vice President of Retail Research Dr. Ravi Singh summarized the potential risks caused by the protracted Middle East crisis as follows: crude oil prices and their impact on inflation and rupee. “Turning into defensive sectors like IT, healthcare and FMCG to protect portfolios can provide stability during uncertainty,” Singh said. He also suggested adding gold as a hedge against geopolitical risks and inflation.

Bigul CEO Atul Parakh underlined the importance of a multi-pronged strategy. “To continue rupeeParakh recommended “cost averaging through disciplined SIP investments during market corrections, keeping energy stocks as a natural hedge and greater allocation to defensive sectors like FMCG and pharma.” He also underlined gold’s role as a safe haven, suggesting that gold should account for 10 percent. “India’s current account deficit is minimal and the country’s $692 billion foreign exchange reserves are a good place for us to deal with external shocks,” Parakh said. However, he warned that disruptions in the Strait of Hormuz could strain Brent. Crude oil prices above $95 per barrel affect market sentiment.

Share.Market CIO Sujit Modi highlighted India’s dependence on oil imports and its vulnerability to price fluctuations. “Higher transportation costs could impact crude oil-dependent sectors, leading to increased inflation,” Modi said. he said.

Tradejini COO Trivesh added that balancing portfolios with defensive assets and focusing on export-oriented stocks can help protect against sudden market fluctuations. “Indian investors have shown resilience as seen in record-breaking data SIP “The goal is to remain prepared for fluctuations while taking advantage of growth opportunities,” Trivesh said.

Experts agree that a proactive approach is vital when dealing with the potential impacts of the Middle East crisis. Implementing strategies such as maintaining disciplined SIPs, investing in defensive sectors and allocating to safe haven assets such as gold can provide a buffer against uncertainty. India’s strong foreign exchange reserves and minimal current account deficit position it to be resilient to shocks, but investors need to remain vigilant as the geopolitical landscape continues to evolve.

Disclaimer: The opinions and recommendations expressed above are those of individual analysts or brokerage firms and not Mint. We recommend investors consult certified experts before making any investment decisions.