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Informist, Monday, Mar. 2, 2026

 

By Anshul Choudhary

 

MUMBAI - The Nifty 50 index is at risk of a 1000-point fall from its current level if the US-Iran hostilities continue for more than a week. Analysts are keeping a close eye on Brent Crude futures. They say a sustained level of $80-$85 per barrel for a few weeks will start to hit the margins of Indian companies.

 

The Nifty 50 index slumped 2% intraday Monday to 24603.50 points after the US and Israel attacked Iran over the weekend and Iran, in retaliation, targeted US military bases across West Asia. The index pared some losses in the final two hours of the session to close at 24865.70 points, down more than 1% from Friday. Analysts are concerned about a prolonged hit to crude oil supply amid the possibility of oil facilities across West Asia coming under attack as hostilities spread and after Iran shut the Strait of Hormuz Sunday.

 

"...there is a considerable impact (on oil supply) that can happen if the Strait is actually hampered," Dhananjay Sinha, head of equities at Systematix Shares and Stocks, said. "The bigger worry for me is if other countries start to participate." There were reports that Iran, besides targeting US military bases across the region, also targeted civilian infrastructure in the host countries. This raises the risk of these countries, too, entering the fray at some point.

 

Analysts say the Nifty 50 can fall to 23800 points in the medium term--implying a fall of more than 4% from the current level--if Iran and the US do not reach an agreement soon to cease hostilities. The extent of the fall this week will depend on the intensity of the hostilities. "If the whole thing ends in the next 2-3 days, probably you'll see a smart recovery coming about," said Pawan Bharadia, co-founder and chief investment officer at Equitree Capital, a Mumbai-based portfolio management service provider. "If you see this thing extending to maybe another four weeks, then you'll start feeling the pinch of the supply chain."

 

Oil marketing companies will be among the worst hit as their margins would fall sharply because of higher crude oil prices. The companies may not find support from the government as it may refrain from raising retail prices of petrol and diesel with elections due in several states, including West Bengal and Tamil Nadu.

 

Among others, tyre and paint manufacturers may also take a hit from higher costs as crude oil derivatives are key raw materials for these companies. The closure of the Strait of Hormuz is likely to increase shipping costs for exporters, including chemical and automobile companies.

 

Crude oil prices are the major indicator that will decide the movement of the equity market in the coming weeks, say analysts. As Israel and the US launched a fresh wave of attacks and Iran continued with its retaliation, the May Brent Crude futures contract crossed $82 per barrel briefly before coming off the high. At 1604 IST, the contract was up nearly 8% at $78.5 per barrel.

 

"Key monitorables include retaliation intensity, sustainability of Brent above USD 80/bbl and any disruption to Hormuz shipping, with crude emerging as the primary macro variable for Indian equities," JM Financial Institutional Securities Ltd. said in a report.

 

OTHER WORRIES

The Nifty 50 index, which had slumped more than 2% intraday, came off the low later and ended closer to 24900 points, surprising some analysts who had expected it to close near 24800. The fall was probably limited because investors think the hostilities will end soon. Many analysts believe the crisis may not last more than a week or two because higher crude oil prices are against American interests.

 

"...the supply (of oil) is too high at this point of time. So, levels above $80-$85 are usually not sustainable... it becomes a problem for the US also to sell oil," Amit Kumar Gupta, founder of Fintrekk Capital, said. Further, a rise in oil futures only for a limited period will not hit earnings as companies hedge for 1-3 months of exposure, Gupta said.

 

Analysts expect the Nifty 50 index to rebound quickly to the level of 25200-25500 points if there is a cessation of hostilities in the next one week. However, an end to the shooting will not mean the coast is clear for the next bull run. There are other concerns among analysts, such as the US tariffs and slow earnings growth, that will limit any sharp rise in the index. The US Supreme Court recently ruled most of the tariffs imposed by President Donald Trump in 2025 illegal. However, Trump was quick to find other ways to impose a baseline 10% tariff to replace the outlawed tariffs. He has also threatened to raise these to 15%.

 

The earnings growth of companies in the Nifty 50 index improved in the December quarter but Sinha of Systematix said this needs to be sustained for returns to also improve. The aggregate net profit of the Nifty 50 companies, excluding one-time income and costs, rose just over 9% on year--three times the 3% growth reported in the year-ago quarter and a sharp turnaround from the slight fall reported in the September quarter.

 

Gupta of Fintrekk expects the Nifty 50 to rise to 27300 points by the end of the year, which would be a rise of around 10% from the current level but only 4.5% from the level seen at the end of 2025. Several analysts said the returns this year are likely to mirror earnings growth, which remains in single-digit for at least the Nifty 50 companies.  End

 

US$1 = INR 91.47

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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