The US military action against Venezuela has increased geopolitical tensions in global financial markets. The potential impact on the Indian stock market, gold, silver, and crude oil is being assessed.
Following the US military action against Venezuela, geopolitical tensions have escalated globally, impacting international financial markets as well as India. Venezuela holds the world’s largest oil reserves, so this development has alarmed investors, impacting all asset classes, from the stock market to gold, silver, and crude oil.
Regarding the Indian stock market, there are no signs of any major panic at the moment, but the potential for increased volatility remains. If crude oil prices rise, it could raise concerns about inflation and the current account deficit, putting pressure on the stocks of oil marketing companies, airlines, and consumer-facing companies.
On the other hand, a strengthening dollar could provide some support to IT stocks. Overall, the market appears likely to see limited fluctuations rather than a major decline.
Gold is likely benefiting directly from geopolitical tensions. Investors tend to seek safe havens in uncertain environments, and gold has traditionally been a preferred choice. Following the Venezuela crisis, gold prices have strengthened in the international market. If the tensions persist, gold could reach new record levels.
The impact of these developments on silver appears to be somewhat different. While safe-haven demand supports silver, global economic uncertainty could impact industrial demand. Consequently, silver prices are likely to remain volatile, with strong upside potential.
The situation on the crude oil front is currently balanced, as Venezuela was already supplying limited quantities of oil to the global market. However, this military action has added a “risk premium” to the oil market. If tensions escalate or instability occurs in other sectors related to oil supply, crude oil could become more expensive in the future.
India currently does not import crude oil from Venezuela, and its supplies from Russia and West Asia remain stable. Strong foreign exchange reserves can also help India weather this global crisis.
