Iran-Israel-US war: Nifty may test 24,500, cautions Emkay; where to hide?

Iran-Israel-US tensions may trigger Nifty correction to 24,500, says Emkay. Sectors at risk, safe bets, oil shock impact and investor strategy explained

Fresh tensions in West Asia, involving Iran, Israel and the United States, have added uncertainties into global markets, including India. At 7:20 AM, GIFT Nifty futures were quoting nearly 130 points lower at 25,214 levels, suggesting a massive gap-down start for the domestic equity markets. 

Going forward, analysts at Emkay Global Financial Services expect the flare-up to "trigger a correction in the Nifty" with the benchmark potentially testing the 24,500–25,000 zone if tensions persist. The index, they said, may even go lower if the conflict lasts more than 1-2 weeks as India’s reliance on energy imports and relatively rich valuations could make it susceptible to short-term foreign selling and currency volatility. 

 

"However, we expect the Middle East war to end within a week in our base case, followed by a relatively swift market recovery -- similar to previous geopolitical episodes," it said in its latest India Strategy report.

How Indian stock markets reacted to previous geopolitical wars?

When the Russian invasion of Ukraine began in February 2022, the Nifty fell nearly 3 per cent in the first week and remained subdued over the three months. 

By contrast, during the October 2023 flare-up in West Asia and the June 2025 Iran-related escalation, the Indian market proved far more resilient, delivering gains of 10.5 per cent and 2.2 per cent, respectively, over the subsequent three months. 

This, Emkay Global said, shows that unless disruptions are prolonged and systemic, Indian equities tend to absorb geopolitical shocks faster than feared.

Sectors at risk due to the Iran-Israel-US war

According to the brokerage, oil marketing companies, airlines and select infrastructure players with heavy Middle East exposure could be at risk if the conflict drags on. 

"OMCs may struggle to pass on higher costs; L&T/KEC (large order book in the Middle East); IndiGo (cost-price pressure + flight cancellation); and Capital goods, autos, and consumer durables (if metal prices stay elevated for long) seem vulnerable to a prolonged stressed scenario," it said.

Where to invest?

On the other hand, “the best places to hide” in this market, it said, may include upstream energy producers, metals, information technology, and private sector banks. 

While upstream oil firms benefit from higher realisations, IT services companies could gain from currency depreciation if the rupee comes under pressure amid foreign portfolio outflows. 

"Few sectors are unscathed against this scenario. Upstream energy (ONGC/OIL) seems to offer the best protection from war-related uncertainties, though some benefits could be offset by windfall taxes. Metals stocks (Hindalco) may gain if commodity rally spreads beyond oil," Emkay said. 

That apart, IT sector, it said, may see no impact on fundamentals, while it may benefit from currency depreciation. It picked Infosys and HCL Tech as its top bets, though it cautioned against AI-related fears. 

Pharma, a classical defensive sector, and Private banks with relatively inexpensive valuations, look other "safe plays" in this market.

Middle East crisis and oil shock

That said, the key macro risk for India, amid the Iran-Israel-US war in West Asia, remains a flare up in crude oil prices. 

Analysts at Emkay Global warned that the hostilities could cause "severe dislocation of oil supplies and global supply chains," potentially pushing Brent crude towards $90–100 per barrel in the near term. Brent crude futures jumped more than 7 per cent Monday morning to test $80 per barrel-mark. 

It, later, erased some gains to quote at $76.25 per barrel – up 4.6 per cent. 

"For India, which imports the bulk of its crude requirement, every $10 per barrel increase could widen the current account deficit by roughly 0.5 percentage points of GDP, while also stoking inflationary pressures," Emkay noted. 

That said, the brokerage added that oil futures markets are signalling that traders expect the spike to be temporary. 

"Prior to the latest strikes, the crude curve was inverted, typically a sign that supply tightness is seen as short-lived. While prices may reset higher in the immediate aftermath, the structure of the futures market suggests expectations of eventual normalisation rather than a prolonged energy shock," Emkay Global said. 

For investors, the brokerage suggested a two-fold strategy. Market participants, it said, should brace for volatility in the short term and avoid over-leveraged or oil-sensitive exposures. 

“In the medium term, resist the temptation to exit quality equities purely on geopolitical headlines, especially if the conflict remains contained. The larger risk to India is not the headline shock, but a sustained surge in oil that erodes macro stability, weakens the rupee, and squeezes corporate margins,” it said.