Mr Trump began the New Year with military actions in Venezuela, capturing Maduro over allegations of narco-terrorism. According to the US, the operation aimed at dismantling a regime seen as legitimate and criminal, citing drug trafficking and security threats. This is something similar to the invasion of Panama in 1989 to depose military leader Manuel Noriega. Latin America has historically been influenced by US foreign policy under the Monroe Doctrine. If the doctrine said “keep out” and the Roosevelt corollary said “we will keep the peace”, the Trump corollary says “This is our exclusive economic and security zone, and we will remove any foreign or criminal influence that threatens it”.
It’s all business!
Another perspective to attack is the US interest in Venezuela’s oil reserves. Venezuela holds the largest proven crude oil reserves globally. However, the average production in 2025 was about 1.1 million barrels per day compared to 3.5 million barrels per day during the 1970s; the dip in oil production is largely due to the US sanctions, lack of capital and underinvestment. In short, Venezuela’s economy was already in trouble when the US carried out its operations.
How will the stock market react?
Given the size of Venezuela’s economy and trade relations with India (we purchased goods worth $364.5 million in 2024-25), there should be a limited impact on the Indian stock market. However, the geopolitical tension is expected to boost the prices of gold, silver, and possibly oil. Any reaction in Indian indices or stocks would be more psychological than fundamental, leading to high volatility in the short term.
Sectors to watch out for
Crude oil and energy - Though Venezuela’s supply is limited, the geopolitical shock may add a risk premium to oil prices. Oil manufacturing companies such as IOC, BPCL and HPCL may remain under pressure along with players in the aviation, paints and chemical sectors (dependent on oil-linked raw materials). The remaining sectors are expected to remain mostly stable.
The US attack on Venezuela is expected to be a headline event and not a market event for India. Inventors, though, will keep an eye on oil prices, INR stability and domestic fiscal health.
