With renewed missile exchanges between the US and Iran and the critical Strait of Hormuz back in focus, investors are actively evaluating their stock portfolios for resilience against geopolitical instability. Despite initial market fluctuations, crude oil prices have shown a degree of containment, largely due to ongoing technical discussions between the two nations.
Sectors Offering Insulation from Geopolitical Risks
According to Sunny Agrawal, Head of Fundamental Research at SBI Securities, while a globalized economy means most sectors feel the ripple effects of geopolitical disruptions, certain domestically-focused businesses tend to be more insulated. He highlights essential sectors such as defence, utilities, telecom, hospitals, diagnostics, FMCG-consumer staples, and pharmaceuticals as relatively 'war-proof'.
Agrawal's top picks, considering their earnings growth outlook, include:
- Bharti Airtel (Telecom)
- BEL (Defence)
- Power Grid (Utilities)
- Sun Pharma (Pharmaceuticals)
- Narayana Health (Hospitals)
- Marico (FMCG-Consumer Staples)
The recent escalation follows a period of volatile relations, with a ceasefire announced on April 8, 2026, and an interim peace deal signed on June 17. However, US strikes on July 8, prompted by attacks on tankers in the Strait of Hormuz, have brought shipping traffic in the region to a near halt.
Cautious Approach and Broader Resilient Themes
Santosh Meena, Head of Research at Swastika Investmart Ltd, advises a cautious approach, suggesting it's still early to aggressively pursue purely 'war-proof' stocks. He notes that Brent crude oil prices haven't surged dramatically, indicating a clearer signal for escalation would be prices crossing $81 per barrel.
Meena concurs that defence companies could ultimately benefit. Beyond traditional 'war-proof' categories, he identifies resilient themes expected to perform well regardless of the US-Iran situation's evolution, including:
- Healthcare and Pharma (defensive plays)
- Energy Transition
- Data Centres
- Electric Vehicles (EVs)
His current top picks include:
- Sun Pharma
- Narayana Hrudayalaya
- Adani Energy Solutions
- Kirloskar Oil Engines
- ABB
- Thermax
- Sona BLW
- TVS Motor
Market Performance During Ceasefire and Hostility
During the announced ceasefire period, defensive healthcare sector stocks saw significant gains, with several BSE500 companies like Granules India, Ipca Laboratories, and Gland Pharma recording over 10 percent returns. EV player Ather Energy also jumped 23 percent. Conversely, the earlier hostility period between March and June saw negative returns for three out of five BSE500 stocks, particularly impacting FMCG, auto, IT, and banking sectors.
Investors are advised to consult with a qualified financial advisor before making any investment decisions.