THIS AFTERNOON: Indian seafarers killed by US strikes in Hormuz

Good morning, everyone, and happy FRIDAY. We are wrapping up the week with a brisk issue focusing on the escalating fallout from the Gulf conflict.

The big story today: The Middle East fuel shock is weighing on India’s road logistics sector, with fleet operators projected to see their operating margins shrink by up to 200 bps this fiscal year. To keep the power grid and fertilizer plants running, Indian refiners are paying a steep 40% premium on spot LNG to replace disrupted volumes from Qatar and the UAE.

But the macro outlook remains bright: Despite the regional turbulence and a depreciating INR, BlackRock is doubling down on its bullish view of Indian equities, viewing the recent foreign sell-off as a strategic entry point. The World Bank is also holding steady, maintaining India’s growth forecast at a robust 6.6% even as it downgrades the wider global outlook.

Indian seafarers caught in Gulf tensions

Three Indian crew members were killed and 21 others were rescued after a US strike on the commercial vessel Settebello along Oman’s coast. The vessel was carrying 24 Indian crew members when it reported an engine fire following the attack with the Omani Navy responding to its distress call.

India seeks de-escalation: The Indian foreign ministry urged the US to stop attacks on shipping after three Indian-crewed tankers were hit by US forces this week. “These attacks must cease and end,” foreign ministry spokesperson Randhir Jaiswal said. India also summoned the US charge d’affaires in New Delhi to convey its “deepest concerns” after the Settebello strike.

Strike fallout: US Central Command said the Settebello was hit after the crew repeatedly failed to follow their directions and alleged the vessel had violated the US blockade by attempting to transport oil from Iran. The ship’s manager, IOS Marine FZE, rejected claims that it ignored warnings or was carrying Iranian crude, and called for an international investigation.

BlackRock still bullish on India

BlackRock sees value in Indian equities, calling them one of its “highest conviction” emerging market windows over the medium to long term. “As long as India's GDP grows between 6% and 7%, that's a ​nice sweet spot for the economy to keep growing, keep expanding,” Natasha Sarkaria, the firm’s EMEA investment strategy lead of wealth, told Reuters. Indian equities have been “over-punished” by investors’ concerns about the country’s lack of a direct AI window and its vulnerability to oil prices, says Sarkaria.

IN CONTEXT- India's benchmark indices — Nifty has fallen 11% YTD, while the Sensex has dropped 13% this year — as investors shifted toward AI-driven markets such as Taiwan and South Korea. High energy prices and a depreciating INR have also triggered a foreign investor sell-off.

Why it matters: A bullish outlook from the world’s largest asset manager — which oversees more than USD 14 tn in assets — suggests that global institutions continue to view India as a structural growth market despite near-term volatility and external headwinds.

Long-term outlook intact: BlackRock remains positive on financials, industrials, materials, utilities, and consumer discretionary stocks, citing favorable demographics, infrastructure spending, and resilient economic growth. The asset manager views record foreign outflows, which have exceeded USD 20 bn since the Iran war’s onset, as a strategic entry point for medium-term allocators.

World Bank cuts global growth outlook

India remains one of the world’s fastest-growing major economies despite mounting global headwinds, with the World Bank maintaining its FY 2027 growth forecast at 6.6% and upgrading its FY 2028 projection to 7.2%, as per its report.

Over the medium term, India’s trade pacts and structural reforms undertaken to improve the business environment are set to support FDI inflows. “In India, reduced revenues due to tax reforms are forecast to be partly offset by slower capital expenditure growth and reductions in non-essential current spending,” the report states.

Why it matters: The forecast attests to India’s position as a relative bright spot for Gulf investors at a time when growth expectations are being downgraded for two-thirds of the world’s economies. However, higher oil prices and regional supply disruptions continue to pose risks for India's external balances, inflation outlook and energy-intensive sectors.

Data point

USD 863 bn — that is the value of India’s total exports in FY 2026, a record high and up from USD 468 bn in FY 2015, PTI reports. The increase was led by services exports, which rose to USD 421 bn from USD 158 bn over the period.

The big story abroad

SpaceX’s historic IPO is the biggest story in the business press right now. Elon Musk’s company made history as the biggest IPO ever, raising USD 75 bn — making it double the size of Aramco’s USD 29.4 bn listing in 2019. Retail investors put in some USD 100 bn worth of orders.

AND- Underwriting banks have been given an over-allotment option to buy an additional 83.3 mn shares at the IPO price, potentially increasing the size of the IPO to USD 86 bn if fully exercised. The firm is now valued at nearly USD 1.8 tn. All eyes are now on its trading debut later today, with analysts expecting at least a 10% pop — or much more considering the hype around the IPO — and many looking towards how performance holds up over the next few weeks.

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