Why NSE, BSE Stay Resilient Amid Israel-Iran Conflict — Which Sectors' Stocks To Watch And Avoid? Explained

Despite the ongoing geopolitical tensions between Israel and Iran, the Indian stock markets have remained surprisingly stable. Market Analyst Khushi Mistry believes this resilience is driven by strong domestic fundamentals and proactive policy support.

Indian equity markets opened weak on Thursday as investor sentiment remained cautious due to rising geopolitical tensions. Concerns about a possible US military strike and uncertainty around Iran’s response kept traders on edge.

At 12:58 PM on June 19, 2025, the Sensex was down 30.74 points at 81,413.92, while the Nifty 50 slipped 24.60 points to trade at 24,787.45, showing a 0.1% decline.

“Markets have been very resilient. One of the main reasons is the recent RBI rate cuts, which are empowering domestic industries. Also, India’s import book is well diversified, so the impact of oil supply disruptions hasn’t been severe,” she explained.

Why Are Indian Markets Holding Up?

According to Mistry, India’s solid macroeconomic fundamentals — including controlled inflation, stable interest rates, and strong corporate earnings — are playing a major role in shielding the markets from global shocks.

“Strong fundamentals, steady corporate earnings, and a diversified trade portfolio are keeping our markets insulated for now,” she said.

Even as oil prices spike due to war-related uncertainties, India’s economy hasn’t faced the brunt of it yet. However, she does caution that if the war escalates further — especially if oil installations in Iran are attacked — we could see volatility ahead.

What If the War Escalates?

“If Israel attacks Iran’s oil infrastructure, crude prices may spike sharply. This would directly pressure inflation and hurt oil marketing companies like IOC, HPCL, and BPCL,” Mistry warned.

On the day’s trade, Reliance Industries saw a modest gain of 0.64%, closing at Rs 1,439, while Oil India also edged up by 0.19% to Rs 470.45. In contrast, oil marketing and gas-related companies faced selling pressure. Hindustan Petroleum slipped 0.28%, ONGC fell 0.30%, and IOC and BPCL both dropped by 1.28%.

Petronet LNG declined by 1.60%, IGL lost 1.73%, GAIL was down 2.58%, and Adani Total Gas (ATGL) saw the steepest fall of 3.44%, ending at Rs 628.05.

She added that sectors with direct exposure to Middle East trade and crude oil dependency could feel the heat. The rising volatility index (VIX) and inflation fears are early signs of concern.

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What Should Investors Do?

Khushi Mistry recommends a cautious but strategic approach: “This is not a time for blind buying. Investors should focus on domestic industries and sectors with strong fundamentals. Defence and banking look promising due to stable earnings and government support,” she advised.

Among her top picks in defence are HAL, BEL, and BHEL, thanks to a robust order book and capex support from the government. In banking, HDFC Bank and ICICI Bank stood out for their strong financials and stability.

What Worries Market Now?

“My biggest concern is a shift of investor interest toward safer assets like gold and debt if the war escalates. Equity markets could face outflows in the short term,” said Mistry.

She also highlighted that oil marketing companies may see squeezed margins, while oil producers like ONGC might benefit from higher crude prices.

Market analyst Khushi Mistry believes that sector performance in the current geopolitical scenario will vary significantly, and investors should be selective. She sees the defence sector as bullish, supported by strong government spending and a healthy order book.

“Companies like HAL, BEL, and BHEL are well-positioned due to rising defence capex,” she noted. The banking sector also looks stable, thanks to recent RBI rate cuts and strong earnings momentum from major banks like HDFC and ICICI.

However, Khushi is cautious of oil marketing companies such as IOC, HPCL, and BPCL, warning that “their margins could be squeezed due to the spike in crude oil prices.” On the other hand, oil producers like ONGC could benefit from higher selling prices and stable input costs, making them an attractive pick.

When it comes to Reliance Industries, she expects a mixed impact, explaining that while the company is diversified, its retail and FMCG businesses might face pressure from rising inflation.

Lastly, ports and logistics could also be under stress, with Khushi saying, “Supply disruptions and cost pressures may delay ongoing projects and hurt profitability.”

Investors Must Remain Cautious 

While the Indian stock market has shown impressive stability so far, Khushi Mistry suggests that investors remain alert and selective. “In the short term, be cautious. But in the long run, Indian markets still hold strong potential,” she concluded.

Disclaimer: The views expressed in this article are purely informational, and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks, and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds.