Rs 1 lakh crore wiped off! Bajaj Finance shares tumble 18% in March so far amid raging Iran-US war

Shares of Bajaj Finance extended their decline for the second consecutive session on Friday and have declined nearly 18% in March so far as the war between Iran and Israel-US spooked investors. This comes as experts highlight the prolonged geopolitical conflict’s possible macroeconomic impact on India.The war between Iran and Israel-US is about to enter its fourth week, which has rattled markets, with Dalal Street being no exception. A significant portion of investors’ wealth has been wiped off since the beginning of the war, as rallying oil prices and the gas crisis weighed.

If the Middle East conflict continues to push up energy prices and disrupt supplies, India could face pressure on the rupee, higher inflation and a widening current account deficit, Moody’s Ratings had said. “Costly energy imports would weaken the rupee, raise inflation, worsen the current account balance and complicate monetary policy as well as fiscal management if they lead to expanded subsidies to help offset the economic shock,” it added.

“But a prolonged disruption in navigation through the Strait of Hormuz, beyond our baseline of a few weeks, would likely trigger sustained supply shortages; prices averaging higher than USD 100 per barrel for Brent, the main international benchmark crude; higher inflation; tighter financial conditions; and slower global growth,” it further said. Rising inflation expectations will lead to concerns over the RBI having lower margin to ease monetary policy.

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“India is a resilient country with strong fundamentals. While we have war raging on, Indians understand the challenges and are willing to work with the government. There will be a shortfall in economic activity in the short run, but we will make up for it in the coming months,” said Union Commerce and Industry Minister Piyush Goyal during a fireside chat with CNBC-TV18 earlier this month.

Notably, some ships have been able to pass through the Strait of Hormuz, easing oil prices slightly today. Yet, worries over the continuing war are keeping investors on edge.
The recent decline in Bajaj Finance’s share price comes amid an overall drop in financial services and banking stocks. Bajaj Finance shares have declined more than 20% in the past one month, wiping off more than Rs 1 lakh crore from its market capitalisation since the beginning of the war in early March to fall to nearly Rs 5 lakh crore.
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