As conflict roils markets, pain will be felt widely, Pg10

Key Highlights:

• West Asia conflict caused major Asian market declines on Monday, with Nikkei 225 down by 1.35%, Kospi by 1%, and Hang Seng by 2.14%.
• BSE Sensex fell by 1.29% (1,048 points), and India VIX surged 25% due to conflict uncertainty.
• Brent crude oil prices rose over 6% amid fears of Strait of Hormuz closure; analysts predict potential $100 per barrel if disruptions worsen.
• Indian markets face pressure, with Sensex down almost 6% YTD and FPI outflows of $2 billion in 2026 after $18.9 billion outflows last year.

Detailed Insights:

• Conflict escalation has increased risk aversion, driving demand for safe-haven assets like gold.
• OPEC+ agreement to increase oil output by 206,000 barrels per day was overshadowed by the temporary shutdown of Saudi Aramco’s Ras Tanura.
• Higher crude oil prices could impact India's inflation and twin deficits, given its reliance on oil imports.
• Disruptions in Gulf economies could affect remittance flows to India, impacting the Indian diaspora.
• Over 21 crore demat accounts existed as of October 2025, indicating a broad base of Indian society invested in markets, amplifying the impact of market downturns.

Key Concepts Involved:

• India VIX: A real-time index representing the expected market volatility over the next 30 days.
• Brent Crude Oil: A major benchmark price for purchases of oil worldwide.
• Foreign Portfolio Investors (FPI): Entities investing in the financial assets of a country without directly managing them.
• Demat Account: An account to hold financial securities in electronic form.