Washington. The military action taken by America on Venezuela has increased geopolitical tensions in the global financial markets. Due to this, the possible effects on the Indian stock market, gold, silver and crude oil are being assessed. Know what precautions investors should take.
After the military action taken by America on Venezuela, geopolitical tension has increased at the global level, which seems to be affecting the international financial markets as well as India. Venezuela is the country with the world’s largest oil reserves, so this development has alerted investors and its impact is being seen on all asset classes from the stock market to gold, silver and crude oil.
Talking about the Indian stock market, there are no signs of any major panic at the moment, but there is definitely a possibility of increasing volatility. If crude oil prices rise, it could increase concerns over inflation and current account deficit, which could weigh on shares of oil marketing companies, airlines and consumer-oriented companies.
On the other hand, if the dollar strengthens, shares of IT companies may get some support. Overall, instead of a big decline in the market, there seems to be a situation of fluctuations within a limited range.
effect on gold
Gold seems to be directly benefiting from geopolitical tension. In an uncertain environment, investors turn to safe investments and gold has traditionally been their preferred option. After the Venezuela crisis, gold prices are seen strengthening in the international market. If the tension prolongs, gold may reach new record levels.
There will be sharp fluctuations in silver
The impact of this development on silver looks slightly different. On one hand, demand for safe investments supports silver, while on the other hand, global economic uncertainty can affect industrial demand. For this reason, there is a possibility of sharp fluctuations in the prices of silver.
Crude oil may become expensive
At present the situation on the crude oil front is balanced, because limited quantity of oil was already being supplied to the global market from Venezuela. However, this military action has added ‘risk premium’ to the oil market. If tensions increase or there is instability in other areas related to oil supply, crude oil may become expensive in the future.
It is a matter of relief for India that at present it does not import crude oil from Venezuela and its supply from Russia and West Asia remains stable. Strong foreign exchange reserves can also help India deal with this global crisis.
