Israel-Iran Conflict: Possible Impact On India | Iran-Israel War Outcome In 5 Key Points

The Ministry of External Affairs, India expressed its deep concerns about the Iran-Israel conflict and added that it is important this clash does not take ‘a wider regional dimension’. As we know India is dependent on middle-east for several resources, the country may suffer through instability, in case the war escalates. As we speak of this, let’s delve into the sectors that might get affected.  

1: STOCK MARKET 
The Iran-Israel conflict has already sowed its seeds, with the Sensex and the Nifty opening on a gap-down note as on Thursday, the 3rd October. The challenges for the Indian stock market could rise significantly if the conflict escalates further. Foreign portfolio investment into the Indian stocks has exceeded ₹1 lakh crore that indicates global investors' confidence in our economy. However, prolonged war may lead foreign investors to reconsider their investment strategies, leading to a withdrawal of capital from the Indian market. 
2: INDIAN ECONOMY 
Bilateral trade between India and the Middle East totals an impressive $195 billion. However, it's more than just the exchange of goods as investments from the Middle East have boasted Indian infrastructure, tech startups, and other sectors. While, the Indian firms are establishing in construction and hospitality throughout the Gulf region, any instability in the Middle East could threaten these economic connections. 
3: GOLD PRICE
Investing in Gold is considered to be a safe option in times of market uncertainty especially during conflicts. India's lower custom duty on gold has also increased the demand in the international market. Market participants are expecting gold to rise further if global geopolitical uncertainties worsen. 
4: OIL PRICES
Now, prolonged geopolitical tensions may prompt central banks to reconsider the current rate cuts, influenced by rising oil prices. The conflict could disrupt crucial oil and gas imports leading to higher oil prices, increased inflation, and economic instability in India. The Middle East is the key to India's energy imports despite growing Russian supplies. In India, where 80% of oil needs are met through imports, rising crude prices may dampen investor sentiment. 
5: ENERGY MARKET 
Now, a potential full-scale war between Iran and Israel puts India's energy security at risk. This conflict could hamper transit of crucial oil and gas imports via the Strait of Hormuz, leading to higher oil prices, increased inflation, and economic instability in India. The Middle East remains a key region for India's energy imports despite growing Russian supplies. 
Well, only time will tell whether the conflict will escalate or situation will return to normalcy, which seems unlikely, given the current circumstances. 
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