Business

IIE DIGITAL DESK : Indian equity markets witnessed sharp declines in crude-sensitive stocks on Thursday, following a dramatic overnight surge in global oil prices triggered by renewed hostilities between Israel and Iran. Shares of companies heavily dependent on crude oil—such as HPCL, BPCL, Asian Paints, and aviation firms—fell by as much as 4% during morning trade, amid rising investor anxiety about the impact of geopolitical tension on input costs and inflation.

The escalation began after Israel reportedly launched a military strike inside Iranian territory, drawing immediate global attention and rattling commodity markets. Crude oil prices surged nearly 6% overnight, crossing $89 per barrel for Brent crude—its highest level in over two months. WTI crude also showed a similar spike, reflecting market fears of supply disruption in the already volatile Middle East region, which is critical to global oil output.

The spike in crude prices sent ripples through the Indian stock market, where several sectors are directly vulnerable to input cost inflation driven by oil. State-run oil marketing companies like Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) were among the biggest losers, shedding over 3.5% in early trade. These companies, which rely heavily on imported crude, are particularly sensitive to global oil fluctuations due to regulated pricing and tight margins.

Paint and chemical companies such as Asian Paints and Pidilite Industries also came under pressure. Shares of Asian Paints dropped nearly 4%, with investors fearing a squeeze on margins due to the petrochemical base of many raw materials used in the industry. Similarly, Aviation stocks, including InterGlobe Aviation (IndiGo) and SpiceJet, faced selling pressure, with their operational costs set to rise as jet fuel becomes more expensive.

“Rising oil prices are bad news for the Indian economy, especially at a time when inflation is already sticky and the rupee is under pressure,” said Ramesh Chugh, senior market analyst at a Mumbai-based brokerage. “For companies in transport, paints, chemicals, and refining, this jump in crude prices may significantly impact margins in the upcoming quarters.”

Apart from corporate impacts, the surge in oil prices is also a macroeconomic concern. India, as the world’s third-largest importer of crude oil, is highly vulnerable to price shocks. Higher oil prices widen the trade deficit, increase fuel inflation, and put pressure on the Indian rupee—all of which could prompt a reassessment of the Reserve Bank of India's stance on interest rates, which had recently turned more dovish amid moderating inflation trends.

Market watchers are now closely monitoring further geopolitical developments. Any extended conflict in the Middle East could worsen global energy supply chains, potentially leading to more pain for oil-importing nations like India.

The broader benchmark indices, Sensex and Nifty, were down moderately by midday, but analysts noted that the fall was more sectoral than systemic. “While the overall market hasn’t seen a major panic yet, the focus is clearly on crude-sensitive sectors,” said Meenakshi Desai, an investment strategist.

safe-haven assets like gold rallied globally, and energy stocks saw a boost, particularly for upstream oil companies, which may benefit from higher crude prices in the near term.

As the situation between Israel and Iran continues to evolve, investors and policy-makers alike are bracing for potential volatility. The next few days will be critical, with markets responding not just to economic data, but also to diplomatic and military developments across the Middle East.