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Informist, Saturday, Mar. 7, 2026

 

By Gopika Balasubramanium

 

MUMBAI – India's benchmark share indices are seen volatile in March as the military conflict in West Asia and the consequent jump in crude oil prices will prevent investors from making long bets. Market participants are also worried about the closure of the Strait of Hormuz that has made the entire oil and gas supply chain come to a standstill. However, experts expect the indices to make a sharp rebound once the situation in West Asia stabilises, they said.

 

The uncertainty created by the US attack on Iran will keep sentiment weak and a recovery is expected only once the conflict resolves, as domestic macroeconomic fundamentals remain intact, Pankaj Pandey, head of research at ICICI Direct, said. "Once the conflict subsides, it would not be surprising to see a V-shaped recovery in the market back to the levels seen prior to the escalation" he said.

 

Friday, the benchmark index closed at 24450.45 points, down 315.45 points or 1.3%. Before the hostilities began, the Nifty 50 had closed at 25178.65 points on Feb. 27 and it is down around 3% from pre-war levels.

 

Last weekend, the US and Israel attacked Iran and killed Iran's Supreme Leader Ayatollah Hosseini Khamenei. Iran retaliated Sunday and launched missiles against Israel as well as US bases in the Gulf countries. Iran also shut down the Strait of Hormuz, a narrow waterway that connects the Persian Gulf to the rest of Asia, which is a major transit route for global crude oil. The war is now in its eighth day, with both sides intensifying their attacks.

 

"The conflict (in West Asia) is likely to end sooner rather than later, considering the dominance of US-led alliances," Pandey said. "While the exact timeline is difficult to predict, logically it should not persist for a prolonged period," he said.

 

Technical analysts expect the Nifty 50 to fall as there is very less risk appetite among market participants due to the military conflict in West Asia. It will get increasingly difficult for the index to hold on to gains as traders would adopt a sell-on-rise approach in the near term.

 

The Nifty 50 is expected to face resistance at 25200 points, which indicates any rise will be capped at 3% from current levels, according to the median of estimates from 11 broking firms polled by Informist. The 50-stock index is expected to find support at 23900 points.

 

From the all-time high it had hit in early January, the index is down over 7% and in 2026 the index is down 6%.

 

As for valuations, while some market participants believe large-cap companies are valued reasonably, others think the prices are still expensive, especially when compared to companies in China and Hong Kong. "Though valuations may seem reasonable, from (a) perspective of foreign investors, they would rather invest in China or Hong Kong, as stocks there are cheap," an equity fund manager at a domestic brokerage firm said.

 

On earnings, experts said there has been an improvement across sectors and that the Nifty 50 profit growth in the December quarter was in the high single digit, excluding financial services. The momentum in earnings growth is expected to continue in the coming quarters given the macroeconomic factors at play. The cut in goods and services tax has helped the automobile and consumer goods sectors to improve their top line growth, analysts said.

 

They expect metal companies to post good earnings growth, given the strong demand for steel and rise in base metal prices. As for financial sector companies, analysts said the March quarter will likely be the last quarter where their margins would be under pressure due to the cuts in the benchmark repo rate by the Reserve Bank of India. In 2025, the apex bank has cut interest rates by 125 basis points.

 

ICICI Direct's Pandey expects both top line and bottom line growth of Nifty 50 companies for the financial year 2025-26 (Apr-Mar) to be in high single digit. In the next two financial years, he expects earnings of these companies to grow at 14-15% on year.

 

There has been a sequential improvement in demand during the March quarter and the sales of Nifty 50 companies are expected to grow in low double digit and net profit growth is seen in high single digit, said Narendra Solanki, head of research at Anand Rathi Shares and Stock Brokers. Solanki has a year-end target of 29000 points for the Nifty 50.

 

CRUDE OIL CONCERNS, INFLATION RISKS

In view of the ongoing war in West Asia, there have been mounting concerns across the world about the supply of crude oil and the risk of prices rising to $100 per barrel or above. Before the hostilities, crude oil prices traded at $65-$70 per barrel, but after the war, prices have jumped to $93 per barrel--a near two-year high.

 

Historically, Indian equities have reacted sharply to a spike in price of crude oil in the first 3–5 sessions due to concerns about rise in inflation, current account deficit, and government's fiscal management, Devarsh Vakil, head of prime research at HDFC Securities, said. In a worst-case scenario, where crude oil prices stay at $90-$100 per barrel, Vakil expects the sell-off in the market to deepen. "A prolonged stay above $100/bbl would raise concerns of macro deterioration, where downside could extend beyond 10%, depending on global risk sentiment," Vakil said. 

 

If geopolitical tensions de-escalate quickly and crude oil retraces toward the $75–$80 range, we would expect indices to rebound sharply to pre-war levels, Vakil said. This would be mirroring historical patterns, when the indices had gained 32% in three months post-Gulf War, or post the Balakot incident, when full recovery was seen in less than two weeks, Vakil said.

 

WAR TO STALL EARNINGS, YEAR-END TARGETS?

High crude oil prices for a prolonged period would not only make the import bill expensive for the government but also severely impact margins of Indian companies that rely on this commodity, research heads said. Among sectors, oil marketing, aviation, paints, chemicals, adhesives, cement, fast-moving consumer goods would get impacted due to higher crude oil prices and also due to the prolonged shut down of the Strait of Hormuz.

 

"If Hormuz is shut for 10-15 days, the supply chain impact can be managed by the companies, but if the escalation stretches beyond that, it would severely impact the earnings of companies dependent on exports as well as crude oil," an equity dealer at a general insurance company said. "Paint and FMCG companies will likely see a 3-4% impact in their top line in March quarter and a 1-2% hit in profit," the dealer said.

 

Oil marketing companies will see compression in their margins due to higher crude oil prices and if the government continues to keep retail prices of petroleum products frozen, research heads said. These companies also run the risk of supply of crude oil drying due to the closure of the Strait of Hormuz. More than 50% of India's crude oil imports come through the strait, as per ICICI Direct's strategy report dated Thursday.

 

However, experts do not expect any immediate earnings downgrades for the current financial year as well as FY27 as it is too early to predict, given that there is no clarity on when the war in West Asia would end. However, there is a possibility that crude oil-linked sectors may see downgrades if the prices remain at elevated levels, experts said.

 

"...oil and gas companies, airlines, logistics and infrastructure firms with exposure to Gulf operations would face the most pressure," said Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Higher fuel costs would squeeze margins and could lead to earnings downgrades if elevated crude prices persist," he said. Companies with high energy dependency could see both top-line pressure due to demand moderation and bottom-line compression from rising input costs, he said. "If crude stabilises, earnings estimates and year-end index targets may remain intact, but prolonged conflict-driven oil spikes would likely force analysts to reassess growth assumptions for earnings," he said.

 

Following are the support and resistance levels for the Nifty 50 index for March from 11 brokerages:

 

Broking firm	Support 1	Support 2	Resistance 1	Resistance 2
LKP Securities	23500	--	24800	--
Nirmal Bang Institutional Equities	23500		25500
Globe Capital Market	23800	23600	25000	25500
Indiacharts	23800		25100
Anand Rathi Shares and Stock Brokers	23900	--	25200
HDFC Securities	23900		25200
Angel One	24000	--	--	--
Axis Securities	24000	23800	24800	25200
Religare Broking	24000	23400	25400	25800
Ashika Group	24000		24500	24700
Teji Mandi Investment Technologies	24200		25500
Median	23900		25200

 

End

 

US$1 = INR 91.74

 

Edited by Ashish Shirke

 

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