New Delhi, March 2 -- The escalation of the Israel-Iran conflict, marked by the reported killing of Iran's Supreme Leader Khamenei, is set to impact Indian equity markets through trade flow disruptions and a spike in crude oil prices.

According to a report by Bernstein, while India's direct economic exposure to Iran remains limited, with bilateral trade at roughly USD 1.7 billion annually, the broader regional instability poses a significant risk. "For India, the real risk stems less from direct ties with Iran and more from the possibility that an escalating conflict disrupts the wider region," the report stated.

The vulnerability is most acute in the energy sector. India, as a major crude importer, faces substantial fiscal pressure fro...