Axis Securities estimates that a reduction in Strait of Hormuz tensions could drive up to Rs 1.9 lakh crore in FPI inflows, potentially lifting the Nifty 50 to 28,615. However, as of mid-August 2026, ongoing instability and Brent crude prices near $87 per barrel suggest that these risks have yet to subside, creating uncertainty for foreign capital flows.
Axis Securities recently released a projection suggesting that a normalization of geopolitical risks in the Strait of Hormuz could unlock significant foreign capital for Indian equities. The brokerage estimates that if these risks subside, Indian markets could witness Foreign Portfolio Investor (FPI) inflows ranging from Rs 1.42 lakh crore to Rs 1.9 lakh crore within a few months. This potential influx of capital serves as the foundation for the brokerage's optimistic outlook for the Nifty 50 index.
In its bull-case scenario, Axis Securities has set a target of 28,615 for the Nifty 50 by December 2026. This projection is based on the assumption of a stable ceasefire in the Middle East and a decline in Brent crude oil prices to a range of $70 to $80 per barrel. The base-case target, which factors in a more moderate economic environment, stands at 27,200. However, the brokerage also highlighted a bearish scenario, where the Nifty 50 could potentially fall to 23,030 if shipping disruptions persist and corporate earnings struggle to meet expectations.
The connection between Middle Eastern stability and Indian markets is primarily through energy costs. When tensions rise in the Strait of Hormuz, global oil prices tend to spike, as seen in the first half of 2026 when Brent crude briefly hit $113.63. Higher oil prices create a chain reaction for India: they increase import costs, widen the current account deficit, weaken the rupee, and can limit the Reserve Bank of India’s ability to lower interest rates. Additionally, higher energy costs can put pressure on corporate profit margins, particularly for companies in the manufacturing and transport sectors.
As of August 14, 2026, the ground reality remains complex. While the brokerage report outlines a path for market recovery, recent reports confirm that the Strait of Hormuz is still experiencing significant security challenges, including attacks on ADNOC vessels as recently as this week. With Brent crude currently trading near $87 per barrel, the geopolitical risk premium—the extra cost investors add to prices due to uncertainty—remains firmly in place. This suggests that the conditions required for the brokerage's optimistic bull-case scenario have not yet been met.
For investors, the primary monitorables remain the trajectory of crude oil prices, the stability of Middle Eastern shipping lanes, and the pace of FPI activity. While the potential for substantial inflows offers a glimpse of upside, the current environment is characterized by ongoing volatility. Investors may track diplomatic updates and global energy trends, as these factors will likely dictate whether foreign capital returns to Indian markets or remains cautious.