Adani Ports shares fall 4% as investors weigh Israel-Hamas crisis on domestic companies

Shares of Adani Ports & Special Economic Zone fell 4% on Monday as investors weighed the impact of the Israel-Hamas crisis on domestic companies having exposure to the Middle East.

Shares of Adani Ports, which owns Haifa Port in Israel, were the top losers on the Nifty around 10:15 am. The price action was accompanied with significant volumes as over 18.25 lakh shares changed hands on the NSE around this time.

Palestinian Islamist group Hamas on Saturday launched the largest military assault on Israel in decades, killing hundreds of Israelis and triggering a wave of retaliatory Israeli air strikes on Gaza that continued through Sunday.

Decoding the impact of the crisis, a PTI report said that Indian exporters shipping goods to Israel may face higher insurance premiums and shipping costs due to the Israel-Hamas conflict. It quoted the opinions of a clutch of experts, to bring home the point.

The International trade experts said the conflict may reduce the profits of domestic exporters but will not impact trade volumes unless war escalates.

"For merchandise exports of India, the war may lead to higher insurance premiums and shipping costs. India's ECGC may charge higher risk premiums from Indian firms exporting to Israel," think tank Global Trade Research Initiative (GTRI) said on Sunday and PTI reported.

GTRI co-founder Ajay Srivastava said trade may be seriously impacted if operations at the three largest ports of Israel- Haifa, Ashdod and Eilat are disrupted. These ports handle shipments of agricultural products, chemicals, electronics, machinery, and vehicles.

India's merchandise trade with Israel happens mostly through Eilat port, located on the Red Sea, the PTI report said.

ECGC Ltd (formerly Export Credit Guarantee Corporation of India Ltd) is wholly owned by the government of India. It was set up in 1957 with the objective of promoting exports from the country by providing credit risk insurance and related services for exports.

Mumbai-based exporter and founder chairman of Technocraft Industries India Sharad Kumar Saraf said the conflict may have an impact on Indian exporters in the short run. "But if the war escalates, things may get bitter for our exporters of that region," Saraf said.

"Fortunately, so far there is no report of port disruption. India-Israel bilateral services trade is estimated to be around USD 1.3 billion. It may have no impact unless war escalates to involve bigger parts of Israel. The real impact would depend on the duration and intensity of the war," Srivastava said.

India's key exports to Israel are diesel (USD 5.5 billion) and cut and polished diamonds (USD 1.2 billion).

Indian companies like Sun Pharma, Tata Consultancy Services, Wipro, Tech Mahindra, State Bank of India, Larsen & Toubro, and Infosys have their presence in Israel.

Israeli companies have invested in India in renewable energy, real estate, and water technologies and are also setting up R&D centres and production units in India, investing (FDI) USD 286 million between April 2000 and June 2023.

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