Bernstein Warns Rupee Could Breach 98/USD Amid Iran Conflict, Cuts Nifty Target
Amid the Iran and Israel conflict, India’s financial markets are under strain as Bernstein warns rupee could breach 98/USD due to rising risks. Notably, the global brokerage has underscored that escalating geopolitical tensions and increasing crude oil prices could undermine the Indian currency and affect stock market performance. According to the report, India’s vulnerability emerges from its heavy reliance on oil imports and a widening current account deficit.
Not only this, but Bernstein has also revised its outlook for Indian equities, cutting the year-end target for the Nifty 50 index to 26,000 in its base scenario. However, in a prolonged conflict scenario, the brokerage warned that the index could fall below 20,000, reflecting severe market stress.
Impact on Economy and Markets
In addition, the report suggests that sustained high crude oil prices could trigger double-digit inflation risks and slow India’s economic growth to as low as 2–3%. This could further undermine investor sentiment and lead to foreign capital outflows from India, putting additional pressure on both the rupee and stock markets.
Even in a moderate scenario, analysts believe the rupee could still cross the 98/USD mark due to persistent energy costs and macroeconomic imbalances. In a worst-case situation, the rupee may weaken beyond 110/USD, drawing comparisons to the Global Financial Crisis-like scenario.
Overall, Bernstein emphasised that global geopolitics, rather than economic fundamentals, are currently driving market movements, making India’s financial outlook highly uncertain.
