The geopolitical conditions are getting worse with every passing day. The escalation between the US, Israel, and Iran is negatively impacting the stock markets across the world. There are certain sectors and stocks that can perform well during such market conditions.
In today’s blog post, we will give you an overview of the best stocks to buy in a wartime situation between Iran and the US.
Best Stocks to Buy in Wartime as Iran-US clash intensifies
| S. No. | Company | Current Market Price (INR) | Market Capitalisation (in INR crore) | 52-Week High | 52-Week Low |
|---|---|---|---|---|---|
| 1. | Hindustan Aeronautics Limited | 3990 | 266835 | 5166 | 3354 |
| 2. | Bharat Electronics Limited | 457 | 334313 | 473 | 252 |
| 3. | Paras Defence and Space Technologies Limited | 719 | 5791 | 972 | 401 |
| 4. | Bharat Forge Limited | 1854 | 88657 | 1936 | 919 |
| 5. | Reliance Industries Limited | 1424 | 1927024 | 1612 | 1115 |
| 6. | ONGC Limited | 271 | 340674 | 293 | 205 |
| 7. | Vedanta Limited | 709 | 277403 | 770 | 362 |
| 8. | Tata Steel Limited | 191 | 238448 | 216 | 124 |
| 9. | Infosys Limited | 1315 | 533284 | 1728 | 1264 |
| 10. | Sunpharma Limited | 1807 | 433656 | 1851 | 1547 |
Defence and Aerospace: The government is increasing the defence budget to increase its weapons, military capabilities and to modernise them. These companies will benefit from increased defence procurement and strong government orders. The stocks which directly benefit from it are as follows:
1. Hindustan Aeronautics Limited
This is one of India’s largest aerospace and defence companies. The company is engaged in manufacturing fighter jets, helicopters, and aircraft components.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 15.63 | 178.73 | 649.46 |
2. Bharat Electronics Limited
The company manufactures various radar systems, missiles, and related electronics and communication systems for the military. The company is receiving a large defence order.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 65.16 | 379.11 | 880.71 |
3. Paras Defence and Space Technologies Limited
Paras Defence works in defence electronic equipment, optics, and space technologies. They supply specialised defence equipment.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 49.07 | 188.82 | 194.24 |
4. Bharat Forge Limited
This is a leading engineering company engaged in the manufacturing of artillery systems. The company is actively participating in advanced artillery and weapon systems.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 70.52 | 124.84 | 186.77 |
Oil Sector: As the war is going on in the region which supplies crude and refined oil to the entire world. And this war-like situation can disrupt the supply chain, causing the oil prices to increase across the country.
5. Reliance Industries Limited
Energy companies such as Reliance Industries Limited will be the direct beneficiary of this crude oil price rise. It has the largest refining capacity with global energy operations.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 14.04 | 20.71 | 30.07 |
6. Oil and Natural Gas Corporation Limited
Oil and Natural Gas Corporation Limited is a company which is among India’s largest crude oil exploration companies. Due to higher prices, the profits of this company will increase.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 22.84 | 72.83 | 131.11 |
Metal Sector: Due to a war-like situation, the industrial metals and raw materials can see increased demand during the global uncertainties. This can be beneficial for companies engaged in the metal and commodities sector.
7. Vedanta Limited
Vedanta is a global mining company and is engaged in producing zinc, aluminium, iron ore, and oil. As the company has strong exposure in the metal industry, it will benefit from the commodity price rise due to global uncertainties.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 68.86 | 148.44 | 214.60 |
8. Tata Steel Limited
The steel demand has increased, especially during the war situation, because of increasing economies due to infrastructure, manufacturing, and defence production. The company has global operations and will directly benefit from them.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
| 31.43 | 76.57 | 170.38 |
IT Sector: Due to a weaker rupee because of geopolitical tension, the Indian IT companies will benefit from it. As the major revenue of these companies comes in dollars.
9. Infosys Limited
Infosys is one of the largest IT companies in India. The company’s major source of revenue comes from exports, as the company has a global client base. Weaker rupee and increasing global digital demand will help the company in increasing its revenue and profit.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| (23.03) | (11.24) | (6.22) |
Pharma Sector: The pharma and healthcare industry is considered a defensive sector; the demand for pharma products will be stable during the economic downturn and war situations.
Sun Pharma Limited:
In the Indian pharma sector, Sun Pharma Limited is a prominent player. The company has a global presence and is specialised in the manufacturing of speciality drugs. The company has a consistent revenue source and sells its products across the world.
| 1 Year Return (%) | 3 Years Return (%) | 5 Years Return (%) |
|---|---|---|
| 12.28 | 89.84 | 195.53 |
Read Also: Iran–Israel War Impact on Indian Stock Market
Approach to Invest During a War-Time Situation
Investment during wartime requires a strategic and balanced approach as the market will be highly volatile. Panic selling is not suggested for a long-term investor. However, instead of this, one should focus on diversifying their portfolio across different sectors and asset classes. Short-term speculation should be avoided and focus on strong fundamental companies which have lower debt levels, consistent earnings and profits.
Conclusion
On a concluding note, as the economic tension is rising between the US, Israel and Iran, the equity market is highly volatile. Traders are in panic, exiting their positions in order to avoid any loss due to volatility. However, on the other hand, long-term investors are looking for opportunities in this market and are opting for a balanced approach to investing. There are various sectors which will benefit from this war-like situation, such as energy, defence, metal, oil, pharma, etc. But it is advisable to consult your investment advisor before making any investment decision.
Frequently Asked Questions (FAQs)
Why do defence stocks perform well during geopolitical tension?
Defence stocks can be considered as a good investment option during the increasing geopolitical tension, as countries tend to increase their spending on military equipment to upgrade their defence system.
Why are crude oil prices rising during a war-like situation?
As the current conflict is rising in the region which produces the largest amount of crude oil. And due to the disruption in the supply chain, global oil prices are rising.
Is it safe to invest in stocks during war?
Yes, it is safe to invest in stocks during a war situation, but only for the long term, and investment can only be made in those companies which are fundamentally strong and have lower debts. There are certain sectors which can perform well during such a war situation.
Which sectors can perform well during a war between Iran and the US?
The sectors which can perform well during the war between Iran and the US are pharma, defence, oil and energy, metal and IT companies.
Why does the stock market fall during the war?
The stock market generally falls during war conditions because Investors become uncertain about the global economic conditions, supply chain disruption, inflation, and rising commodity prices, etc.
