Bernstein Flags Rupee, Nifty Risks Amid Middle East Conflict

Bernstein analysts have warned that the ongoing Middle East conflict could push the Indian rupee past 98 per dollar and weigh heavily on Indian equities. The firm cited India’s vulnerability to rising energy prices, noting that even under a base scenario of the conflict ending within a month, the rupee faces significant pressure due to the country’s current account deficit.

In its revised outlook, Bernstein cut its Nifty 50 year-end target to around 26,000, a 2% reduction from its previous forecast. Under a prolonged conflict lasting up to a year, the index could fall below 20,000, with the rupee weakening past 110 to the dollar, mirroring the severe market impacts India faced during the 2008 financial crisis.

The analysts stressed that crude oil price spikes are central to the risk scenario, with March already seeing a 7% drop in Nifty and Sensex indices alongside record lows for the rupee. “Geopolitics, rather than fundamentals, now dominate market direction,” the note concluded, highlighting the potential for sharp economic disruption if hostilities continue.

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