Best places to hide in war: 20 stocks analysts say to bet on amid US-Iran conflict

Escalating tensions in the Middle East following US and Israeli strikes on Iran have rattled global markets, with Indian equities bracing for heightened volatility. The BSE Sensex plunged over 1,000 points on Monday as investors worried that a widening conflict could disrupt oil supplies and destabilise the region.

Analysts expect the flare-up to be sharp but potentially short-lived, though they caution that Brent crude could spike to $90–100 per barrel if tensions persist. For India, higher oil prices could translate into pressure on the rupee, a widening current account deficit and elevated inflation.

In such a risk-off environment, foreign portfolio investors typically turn sellers, adding to market pressure. The Nifty 50 could test the 24,500–25,000 zone if the conflict extends beyond a week, market participants said. Margin-sensitive sectors such as paints and oil marketing companies may face immediate headwinds as rising crude prices squeeze profitability.

Amid this uncertainty, brokerages and market experts have identified 20 relatively defensive stocks spanning upstream energy, metals, IT, pharma, defence and banking that could offer relative resilience during the turmoil.

Upstream energy

The most immediate beneficiaries of rising crude prices are upstream oil producers. Brokerages Emkay Global Financial Services and JM Financial have highlighted Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) as direct gainers if Brent crude sustains above $70 per barrel.

According to JM Financial, every $1 per barrel increase in crude prices could lift ONGC’s earnings per share by 1.5–2%. While the risk of windfall taxes persists, the near-term earnings impact from higher realisations remains positive.

VK Vijayakumar of Geojit Financial Services also noted that upstream oil companies are likely to outperform in a weak broader market environment.

Metals and mining

Higher crude typically pulls up other hard commodities. Emkay prefers Hindalco Industries as exposure to non-ferrous metals. Systematix lists its top picks in the metals and mining space as Vedanta, NMDC and Tata Steel.

According to Systematix, steel and non-ferrous players are showing margin resilience through operational efficiencies and product mix, while earnings visibility will depend on realisations and raw material costs.

IT and pharma as defensive plays

With the rupee under pressure and the dollar strengthening, IT exporters stand to benefit from currency tailwinds. Emkay lists Infosys and HCL Technologies as relatively safe havens, though AI-related concerns remain an overhang.

Ventura's Vinit Bolinjkar said IT and pharma offer tactical safety as the dollar strengthens.

Pharma, while not named stock-wise by Emkay, is described as a classical defensive sector. Historically, healthcare earnings are less sensitive to commodity cycles and geopolitical shocks.

Defence names

Heightened geopolitical tensions also improve sentiment around defence stocks. JM Financial expects defence names such as Hindustan Aeronautics and Bharat Electronics as two such names. All the defence stocks rallied on Monday, including Paras Defence, Data Patterns (India) and Bharat Dynamics.

The sector is backed by a record defence allocation of Rs 7.85 lakh crore in the Union Budget 2026, which adds structural support beyond near-term events.

Banks as value plays

Despite macro headwinds, banks are seen as relatively safe due to reasonable valuations and a positive credit cycle.

Emkay believes private banks offer protection even if a higher current account deficit marginally hurts deposit growth. JM Financial's preferred banking names include ICICI Bank, Axis Bank, State Bank of India, City Union Bank, Ujjivan Small Finance Bank and DCB Bank.

These banks combine relatively inexpensive valuations with improving asset quality and steady credit growth.

What to avoid

On the flip side, oil marketing companies are vulnerable. JM Financial notes that every $1 per barrel rise above $70 can hit OMC gross marketing margins by Rs 0.55 per litre and reduce consolidated EBITDA by 7-9%. Margin-sensitive sectors such as paints are also likely to see pressure.

Analysts caution that the current shock may create volatility but not necessarily a structural breakdown. Bolinjkar said investors should not mistake a geopolitical tremor for a structural collapse. Historically, such events have created attractive entry points for high-quality names.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)