{"id":38586,"date":"2026-03-25T14:12:23","date_gmt":"2026-03-25T14:12:23","guid":{"rendered":"https:\/\/www.europesays.com\/ch\/38586\/"},"modified":"2026-03-25T14:12:23","modified_gmt":"2026-03-25T14:12:23","slug":"ubs-downgrades-indian-stocks-to-neutral-as-iran-war-raises-energy-supply-risks","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ch\/38586\/","title":{"rendered":"UBS downgrades Indian stocks to Neutral as Iran war raises energy supply risks"},"content":{"rendered":"

International brokerage firm UBS<\/a> has downgraded Indian equities to Neutral from Attractive, citing rising geopolitical risks in the Middle East<\/a> and the potential impact on energy supplies, given India\u2019s high import dependence.<\/p>\n

Analysts noted that Indian markets<\/a> are highly sensitive to oil price movements. The country\u2019s reliance on imported crude oil, LNG<\/a> and LPG<\/a> makes it vulnerable to supply disruptions and price spikes, particularly with the Strait of Hormuz acting as a key chokepoint. Elevated energy costs tend to weigh on economic growth, external balances and corporate earnings. \u201cWhile we remain constructive on India\u2019s medium-term growth story, we believe the near-term risk-reward has become more balanced at current levels,\u201d UBS said in a note on Wednesday.<\/p>\n

With the Iran<\/a> conflict now in its fourth week, UBS sees a growing risk that energy prices could remain elevated for a longer period. The recent pattern of escalation, retaliation and pauses suggests that the situation remains fragile and uncertain. Given India\u2019s dependence on energy imports, its equity markets are among the most exposed to oil price volatility. Continued uncertainty around the conflict and the possibility of sustained high oil prices<\/a> could keep equities under pressure in the near term.<\/p>\n

India\u2019s vulnerability stems from its dependence on imported crude oil, liquefied natural gas and liquefied petroleum gas. The Strait of Hormuz is particularly critical, accounting for 43% of India\u2019s crude imports and 63% of its LNG imports. Any disruption in this route could quickly impact supply. While India has diversified sourcing, including imports from Russia and the United States, and some tanker movement continues through the Strait, these factors only partly offset the risks.<\/p>\n

The exposure is not limited to crude oil. LPG and LNG are both essential to the economy. LPG is widely used for cooking in households and commercial establishments, while LNG plays a key role in power generation, industry and city gas distribution. Any prolonged disruption could therefore have a direct impact on daily consumption and broader economic activity.
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UBS is not alone in presenting a cautious view on Indian equities. Wall Street firm Bernstein has also adopted a bearish tone, warning that even if the Iran conflict ends soon, the underlying impact on India could be structural. It said the situation could evolve into a \u201cGFC moment\u201d for India if the war drags on, keeping crude prices elevated and tightening external financing, thereby exposing macro vulnerabilities built up during a decade of benign oil prices.
Bernstein has lowered its year-end Nifty target to 26,000 and flagged the possibility of the index falling well below 20,000 in a worst-case scenario. The report noted that the Nifty is already down 12% year-to-date, pushing valuations into what it described as \u201cunprecedented territory,\u201d as the conflict enters its fourth week and oil prices remain elevated despite U.S. President Donald Trump\u2019s comments on a temporary ceasefire.
In its strategy note, Bernstein\u2019s Venugopal Garre said that while markets tend to recover after wars, the key question is whether the current shock leaves a lasting impact on India\u2019s growth, inflation and currency. He drew parallels with the post-2008 global financial crisis period, when GDP growth halved, inflation moved into double digits and the rupee depreciated 30% over five years.
Against this backdrop, Bernstein has revised its base-case year-end Nifty target to 26,000 from 28,100 earlier, even assuming hostilities ease within a month.<\/p>\n

In a more adverse scenario, the brokerage warned that forward price-to-earnings multiples could fall to decadal lows, potentially dragging the Nifty to well below 19,000.<\/p>\n

For now, Bernstein maintains a neutral stance on Indian equities, noting that a prospective upside of 13% is insufficient to justify an upgrade amid ongoing macroeconomic and geopolitical uncertainties.<\/p>\n

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)<\/p>\n","protected":false},"excerpt":{"rendered":"International brokerage firm UBS has downgraded Indian equities to Neutral from Attractive, citing rising geopolitical risks in the…\n","protected":false},"author":2,"featured_media":38587,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[129],"tags":[22478,3188,391,22477,239,927,223],"class_list":{"0":"post-38586","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ubs","8":"tag-indian-markets","9":"tag-iran","10":"tag-lng","11":"tag-lpg","12":"tag-middle-east","13":"tag-oil-prices","14":"tag-ubs"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/116290226915867501","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/38586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=38586"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/38586\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/38587"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=38586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=38586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=38586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}