In a note on Indian markets, the brokerage said a 20% rise in crude oil prices typically leads to a 1.5 percentage point cut in earnings, while historically, a 10% supply-driven increase in oil prices has been associated with a 1.3% decline in broader equity indices.
The impact tends to be more pronounced in consumer discretionary, software services, and financials.
The risk is further compounded by currency weakness, as a 1% depreciation in the rupee typically results in an additional 1% drag on the market. This aligns with recent trends, where oil prices have risen about 55% since the onset of the conflict, while the rupee has weakened around 3.5%, implying a cumulative market impact of roughly 11%.
Despite the volatility, HSBC expects the impact on March 2026 quarter earnings to be largely manageable given inventory buffers, with the most direct exposure in airlines, oil marketing companies, and agrochemicals.
HSBC’s strategy for stock selection
In the current environment, the brokerage prefers defensive names and stocks that have corrected recently but continue to offer strong fundamentals. It has identified 10 stock ideas with up to 42% upside across three broad categories.
| Cos | Rating | TP(₹) |
|---|---|---|
| RIL | Buy | 1,780 |
| Bharti Airtel | Buy | 2,400 |
| NTPC | Buy | 410 |
| Sun Pharma | Buy | 2,000 |
| Hindalco | Buy | 1,210 |
| Adani Ports | Buy | 1,800 |
| Godrej Cons Products | Buy | 1,470 |
| Apollo Hospitals | Buy | 8,750 |
| ICICI Bank | Buy | 1,630 |
| SBI Life | Buy | 2,410 |
The first set includes defensive plays such as Sun Pharmaceutical Industries, Reliance Industries, Bharti Airtel and NTPC, which are seen as relatively resilient in the current macro environment.
The second category comprises stocks that have been impacted by ongoing uncertainty but where the downside risk to growth remains limited. These include Hindalco Industries, Adani Ports and Special Economic Zone and Godrej Consumer Products.
The third bucket consists of structural winners that have become more attractive following the recent market correction, including Apollo Hospitals Enterprise, ICICI Bank and SBI Life Insurance.
