Building on earlier concerns over GDP growth projections, the escalating West Asia war is pressuring Indian equity markets and disrupting footwear and textile sectors through supply shortages and cost spikes. Prashant Jain of 3P Investment Managers views the impact as marginal and transient, while industry reports show input costs up 10-50%.
The US-Israel-Iran conflict continues to disrupt oil supplies via risks like a potential Strait of Hormuz blockade, compounding earlier warnings of GDP downside risks. India's Nifty index has fallen 14% from recent peaks, with foreign investors offloading a record $12.7 billion in stocks during March.
Prashant Jain, founder and CIO of 3P Investment Managers, notes India's reduced oil vulnerability, with imports now at 3% of GDP versus over 5% in FY2013. He flags autos, airlines, real estate, and cement as hardest hit, with IT, pharma, and FMCG less affected, presenting long-term value for investors despite challenges.
Footwear production in Noida is at half capacity due to petrochemical shortages. Sudhir Rustagi of Ess Aar Universal reports 15% higher sole production costs, 50% rise in PU rubber, and 25% turnover drop in the past month. Mecca Rafeeque Ahmed of Farida Group notes sole costs (40% of shoe price) up to 30%.
Textile firms grapple with 20-30% PET price surges, labour shortages from cooking gas disruptions (10-12% worker exodus), elevated shipping costs, and export delays. Indraprastha Gas Limited has urged industrial users to limit piped natural gas to 80% of contracted levels.
