How US air strike in Syria may impact Indian stock market next week

FOMC Meeting

On Friday, the Indian stock market started off lower but quickly reversed course and went positive thanks to strong advances by important benchmark indices. However, Indian markets fell and closed in the negative for a second straight session as news broke of a US air strike in Syria that increased tension in the Middle East. While the BSE Sensex lost 398 points and closed at 57,525 levels, the Nifty 50 index lost 131 points and closed at 16,945 levels. On Friday, the Nifty Bank index experienced a 221 point correction and ended the day at 39,395 levels.

Stock market experts claim that the recent geopolitical unrest in the Middle East may harm the chances of a pullback rise when the market begins on Monday of next week. Dalal Street is already feeling the effects of the US bank crisis and concerns about an impending economic downturn. They claimed that the Indian stock market, as well as any other worldwide market, cannot afford further strain because they already face enough difficulties in the coming months. If the Middle East tension rises more, they urged short-term investors to look at high-quality agricultural and fertiliser firms to buy. Nonetheless, IT continued to be the preferred sector for long-term positional investors.

Indian stock market triggers on a global scale
Avinash Gorakshkar, Head of Research at Profitmart Securities, commented on how a US airstrike might affect the Indian stock market “News of the American airstrike in Syria broke just as Indian stocks were recovering from Thursday session losses and morning losses. Just a few hours before the market closed, this new geopolitical anxiety emerged, setting off a sell-off on Dalal Street even though the majority of the important benchmark indices had turned green with respectable gains.”

Avinash Gorakshkar added that the US banking crisis and impending economic recession are already having an impact on global markets, especially Dalal Street. Thus, Nifty might not be able to retain its October 2022 low of roughly 16,800 if the Middle East situation worsens. Gorakshkar encouraged investors to monitor crude oil prices when the market opened on Monday since any increase would signal a new round of market selling.

Purchase or sell shares on Monday
Avinash Gorakshkar advised investors to purchase stocks on Monday to protect themselves from any potential effects of a US airstrike in Syria “Companies that produce oil, carbon black, and lubricants will be directly impacted by a rise in crude oil prices on Monday, and their stocks are anticipated to trade poorly on that day. Nevertheless, higher crude oil prices also mean growing inflation. So, it will indirectly affect other groups as well. Yet, it is anticipated that the fertiliser and IT sectors will stay immune to this geopolitical unrest.”

Ravi Singhal, CEO of GCL Broking, spoke on which company to purchase during the present geopolitical crisis: “TCS is anticipated to outperform India’s top mid-cap IT stocks in the IT sector. Long-term positional investors would have a great opportunity to purchase this Tata stock if it become available at prices between $2850 and $2900 per share. For similar gains of 8–10% from current levels, one should purchase GNFC and Chambal Fertilizers for one to one and a half months.”

According to a statement from the US Department of Defense, the US carried out an airstrike in Syria in response to a deadly UAV attack.

Secretary of Defense Lloyd J. Austin III stated, “At the direction of President Biden, I authorised US Central Command forces to conduct precision airstrikes tonight in eastern Syria against facilities used by groups affiliated with Iran’s Islamic Revolutionary Guards Corps (IRGC),” adding, “The airstrikes were conducted in response to today’s attack as well as a series of recent attacks by groups affiliated with the IRGC against Coalition forces in Syria.”

Disclaimer: Currency Veda does not endorse the opinions or suggestions expressed above by specific analysts or brokerage firms. Before making any financial decisions, we suggest investors to consult with licenced professionals.