US-Iran conflict You would have heard a lot about this in the news And you would be very interested to know what is in this Apart from this, you must also be thinking That we, who usually talk about investment, why are we talking about this conflict? Does this impact our investment? Does this conflict affect retail investors like you and I? And if it does impact us, then how does it impact us? And how can we, retail investors, plan our investments in the coming time to escape this conflict? I, Jagdeep Singh, welcome you to the Groww channel Let us start today’s video In which we are going to talk about the US-Iran conflict And we will talk about how this conflict affects retail investors like us First I will talk about what this conflict is And if you think that this conflict started a few days ago, then you are very wrong Because this conflict is years old When Iran started its nuclear program for the first time Iran is situated in a very strategic location which impacts the oil supply of the entire world a lot Because of which, US told Iran to completely stop their nuclear program But Iran did not stop their program Because of which, US placed economic sanctions on Iran before 2015 If I talk about sanctions, then economic sanctions means That when US says it has placed economic sanctions on a country Then other countries cannot trade with that country After this in 2016, Barack Obama removed all the sanctions on Iran and they both made a deal on mutual understanding Under which Iran said that they would cut down their nuclear programs in the coming time This deal was finalised and Iran started trading well with other countries This continued to work normally until 2018 And in 2018, the new President of the US, Donald Trump came and Completely cancelled this deal because he said He does feel that Iran has cut its nuclear program very well After which, then tension between them started increasing And this tension started affecting the economy of all the countries in the world A few days ago, something happened because of which the entire world economy was affected Apart from that if I talk about the Indian economy then in India the share market went down more than 1% On the day the news came that US killed a designated general of Iran in another country On hearing this, the tensions between US and Iran increased a lot and these tensions Impacts the Indian market directly. How? I will tell you in detail about that now Now you know about the conflict between US and Iran Now you must be thinking about why am I, someone who talks about investment, talking about this conflict? Because, until now, every video I have made on stocks I have spoken on a micro level understanding Like if I talk about some company, consider I am talking about a company A Then mainly two things impact that company One micro level factor and one macro level factor Micro level factors are those that directly impact a company Consider that I am talking about a company A Now in this company A, how is the operational efficiency? Are there any problems in the company A or not? Then that is a company specific problem But there are some problems that are at the macro level That happens at a geo-political level Like this issue that came up Before this as well an issue came up related to Saudi Arabia and the Indian equity market was directly affected So whenever the problem comes in the world which makes an economy scared that there are chances of there being a problem Because that economy is directly or indirectly dependent on that economy Then the stock market is directly affected So when the stock market is directly affected then the companies listed in that are also affected And retail investors like us who invest in that company Then retail investors like us are also directly affected Now I will tell you that this conflict How it affects our country and our economy, through which you will also understand How it impact retail investors You must know that India as a country, as an economy Is very dependent on crude imports If I talk about figures, then 80% of crude is imported in India Apart from this, if I talk about the crude production of Iran Then it produces 4% of crude of the entire world Then you can think and figure out that if there is an issue in Iran Is there are some problems in US and Iran Then our country which is very dependent on Iran for crude They will face a very big hit Now if there is a hit on crude, then it prices goes up Like what happened in this case, when the news came out, the price of crude went up by almost 5% the next day So when the price of crude goes up then India will have to put in more money to import crude Then the currency of India goes down And when the price of crude goes up and the currency goes down Then the inflation of our country increases And you know that when the inflation of a country increases then its currency comes down And we, retail investors get afraid that their money is going to be degraded And when we get scared of the high risk, we demand a higher return Because of which the valuation a company becomes slightly lesser And the price starts to go down Now whenever there is a problem in importing crude or it price goes up then India’s inflation also starts to go up And we retail investors are very afraid of inflation And when the prices of crude goes up then we will have to face inflation Now you have understood that when the crude prices go up then inflation also goes up Now you must have this confusion in mind That if I am an investor, then what are the problems I have to face? So, crude directly or indirectly impacts many companies in a lot of ways Like if I take a set of companies, you must know That in the paint industry, the raw materials that are used are crude And whenever the raw materials of a company are expensive Then there is a direct affect on their margins And whenever the margins of a company go up and down, their shareholders directly start reacting to that So whenever the price of crude goes up, the cost of raw materials of the paint industry also goes up Their margin will come down Their net profit will come down And when their quarterly result comes out Then retail investors like you and I will be very shocked to hear that the company has not performed well In the same way, if I talk about another industry, consumer good industry In this industry it is very important to see what their logistics are If I explain logistics in simple terms That if it’s manufactured in one place, how can it be taken to different parts in India And whenever the price of crude goes up Then diesel and petrol is derived from crude And whenever the price of diesel and petrol goes up their cost of logistics also goes up And as the cost of logistics goes up, the expenses of the company as a whole increases And here also when their expenses increases, their margins will be directly affected If their margins are affected then their profits are also affected So this was the example only of two industries Apart from this also there are a lot of industries Like aviation industry There are a lot of industries that are directly or indirectly dependent on crude And are dependent on the price of crude And whenever the price of crude goes up or down And their margins are directly affected because of which, we investors Are directly or indirectly affected a lot Apart from these there is another industry which is affected a lot by these macro level things that I haven’t spoken about Like the IT industry Now you know that the Indian IT industry exports things outside It exports services Because of which their earning is in US dollar And whenever the price of crude goes up Then the Indian Rupee starts to come down And whenever the Indian Rupee comes down, the US dollar goes up Because of which the income of the IT companies start to increase Because their maximum revenue is in US dollar Now I will come back to a very important question Now you must be thinking what should I, as an investor, do? I want to invest in a company Or I want to get a position in some company So how do all these thing impact me? Like on listening to this news I get very confused that two days ago When the news comes out the market starts to go down by more than 1.5% The day after that the market goes up more than 0.5% If I talk about a day ago then the market opens very low but during the course of recovery, it closes Then there are a lot of fluctuations in the market when we get to hear this kind of news Because whenever this news comes up then the market becomes sentiment driven If I talk about sentiments Then retail investors like you and I take positions without thinking Like, if we feel that there is some recovery happening Then we instantly start buying But when we get the news that something wrong is going to happen That there is a war somewhere or some conflict has happened Then without thinking or understanding we start to sell our position So whenever retail investors start moving in a herd behaviour then sentiments start deriving the market And whenever sentiments derive the market Then for retail investors like you and I the most important suggestion is that That you should not take your position by sentiments But you should choose a good company And invest for a longer horizon And while investing you should not pay attention to these fluctuations And whenever you go into this volatility and try to make money Then you undertake loss, you cannot earn any money So my suggestion to you is that That you should think about what will happen in the coming time, because we can only predict this We don’t know for sure what is going to happen But if we know that a company is good Or it will perform well in the coming 5 years Then we can think that and make an investment And to invest in that company there are no good or bad days So you should only see how the company you’re investing in is How the stock is and what are the factors that impact that company What micro level and what macro level factors impact it And if the macro level factors impact it a lot Then in that case you should wait until you invest in that company And you should see that the macro level factors that impact that company That reduces a little But if in a company, macro level factors doesn’t impact it a lot It doesn’t impact its profits It doesn’t impact its business It doesn’t impact its raw materials Without stressing about it a lot, you can go ahead and invest in that company And you can make a lot of money in the long run So I brought about this video to bring a little change in your perspective Because all the videos I have made until now, I made it in a micro level category So I got this video which will explain to you How macro level factors can impact your investment So I will end this video with a question for you Comment down below and let me know That if any conflict comes up in the coming time which is related to crude Which industry will be the most impacted And which industry will be the least impacted If you liked this video, press that like button Comment and answer our question If you haven’t yet subscribed to our channel then please subscribe Because we bring 2-3 videos every week on financial knowledge Which can help a lot for you to become a good and intelligent investor Happy investing!