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Iran Israel War: There is an atmosphere of panic in the stock markets around the world after the missile attacks by America and Israel in the Middle East. In such a situation, a question is bound to arise in the minds of investors whether this is the time to withdraw their hard-earned money and be safe, or is there a golden buying opportunity hidden in this decline. Amidst this panic, international brokerage firm Jefferies has presented a relief report. The brokerage believes that this tension will not last long and the recent decline may actually prove to be a great 'buying opportunity' for investors. However, it has also been warned that if this military tension continues for a long time, it may have serious economic consequences.

How big is the threat to the Indian economy?

India has deep trade relations with the countries of the Middle East. About 17 percent of our total exports go to this region, while 55 percent of our crude oil needs are met from here. Not only this, the Indians working there send about 45 billion dollars (about 40 percent of the total remittances) home every year. Although our direct trade with Iran is limited, the real fear is that trade and travel with the entire region could be disrupted. If this happens then it will be a big blow to the Indian economy.

The price of oil is determined by the Strait of Hormuz.

According to Jefferies' report of March 1, the biggest threat is the closure of the 'Strait of Hormuz'. 20 percent of the world's crude oil and 15 percent of LNG passes through this sea route. India imports 50 to 60 percent of its crude oil and half of its LNG from here.

If this route is disrupted even for some time, there may be a huge jump in the prices of crude oil. According to the mathematics of economics, an increase of $ 10 per barrel in crude oil has an impact on India's current account deficit (CAD) by 0.35 percent. If crude remains above $ 80 per barrel, then the prices of petrol and diesel, which have been stable for two and a half years, may increase, which will directly lead to an increase in retail inflation (CPI) by 0.20 to 0.25 percent. Apart from this, due to expensive LNG, the costs of companies like IGL and Gujarat Gas may also increase.

Which sector will be hit, where will the silver be?

This geopolitical crisis will have a direct impact on companies related to travel and tourism.

1. Aviation and Tourism: Airlines like IndiGo, whose 35 to 40 percent of international capacity is connected to the Middle East, may have to face the double blow of expensive Aviation Turbine Fuel (ATF) and declining demand. Airport operators and hotel companies like GMR may also face shortage of foreign tourists.
2. Companies related to the Middle East: Companies like L&T, whose 25% revenue comes from this region, Newgen (30% revenue), Dabur, Titan, Cipla, Biocon and Voltas are also expected to see a partial impact on their business.
3. Benefit to defense sector: On the other hand, this tension can become a positive opportunity for defense sector companies. Considering the current global environment, India's defense budget is continuously increasing. The outlook for indigenous defense companies like BEL, Data Patterns and HAL is very strong and they may see rapid growth in the coming times.

Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.