INSUBCONTINENT EXCLUSIVE:
NEW DELHI: The domestic equity market may see some knee-jerk reaction, along with the rest of the world, to the US air strikes on Syria,
when trading resumes on Monday
US early Saturday launched air strikes on Syria in a combined operation with France and Britain in response to a suspected poison gas
attack that killed dozens of people last week
The action was aimed at degrading its chemical weapons capabilities in the biggest intervention yet in the conflict by western powers, said
a Reuters report.
With more than 100 missiles fired from ships and manned aircraft, the allies struck three of Syria’s main chemical
weapons facilities, the report said, quoting US Defence Secretary Jim Mattis and Joint Chiefs of Staff Chairman General Joseph Dunford.
The
US benchmark index Dow Jones closed 100 points down in Friday’s trade just before the air strikes
By Saturday morning, Dow futures traded over 100 points down, signalling bearish sentiment across markets.
Dalal Street veterans say the
development doesn’t bode well for the Indian market, as the attack will cause a further spike in crude oil prices, something the
government is already struggling to deal with.
AK Prabhakar, Head of Research, IDBI Capital Markets, said earlier there was a trade war now
Global markets will not like it
“The US strike on Syria will hurt crude oil prices which will impact India badly because for us crude is more important,” he said.
Crude
prices have already been on a boil, triggering fresh concerns across the globe
Oil prices rose on Friday, making the largest weekly gain since July, supported by concerns about the possibility of western military action
in Syria and reports of dwindling global oil inventories.
This past Wednesday, Brent crude and US WTI hit their highest levels since late
2014 after US President Donald Trump warned that missiles “will be coming” in response to a suspected gas attack in Syria and after
Saudi Arabia said it intercepted missiles over Riyadh
Now, since the feared action has already been executed, oil markets are likely to see more volatility ahead.
Experts say Syria poses a risk
to global stability because of its relationship with other powerful oil producers
“Syria is a client state of both Russia and Iran and the risk for escalation is quite high and I think that is what the market is worried
about," Reuters quoted John Kilduff, Partner at hedge fund Again Capital Management, as saying.
Pashupati Advani of Global Forays said
rising crude prices is the biggest headwind for the Indian market
"The biggest concern that I see is the rising oil prices and it looks like the Saudis want to take the oil to $80 a barrel
This will lead to tough times for us because every dollar costs our country $3 billion a month or so," he said.
Jagannadham Thunuguntla,
Senior VP and Head of Research (Wealth), Centrum Broking, told ETMarkets.com on Saturday that the attack on Syria would trigger kneejerk
reactions in global markets.
"However immediate reaction can be seen on crude oil prices
From Indian macro point of view, oil price is an important factor as India imports 80 per cent of required oil
We have seen in the past that whenever these types of geopolitical tensions come, they subside soon and do not escalate to feared level
Overall, I hope it is just a temporary phenomenon,” he said.
G Chokkalingam, Founder Managing Director, of Equinomics Research and
Advisory, said it's a proxy war and will not escalate into a big war, as everyone is sitting on a nuclear bomb
Hence, there could be only a kneejerk reaction on the market.
