Crude oil's long price slide might be ending, feel some experts. Last Friday, the price of Brent crude, seen as a benchmark for what India uses, saw a low of $75.3 a barrel - it is now trading around $79. The fall has been nearly a third from its high seen in June, only five months earlier.
Not a single retail outlet ran dry. Every household that wanted a cylinder got one. India faced neither a 1991 moment nor a 2013 one. Macroeconomic stability held. This was not an accident, and it was not luck alone. It was the work of a government that chose to act as it had during the pandemic -- deliberately and gradually, building one measure upon another rather than reaching for a single dramatic lever, explains V Anantha Nageswaran, chief economic advisor to the Government of India.
Indian benchmark indices, Sensex and Nifty, closed lower due to significant selling in HDFC Bank and Axis Bank shares, driven by margin-related concerns and escalating US-Iran tensions, which also pushed crude oil prices higher.
Indian stock markets tumbled sharply with the Sensex falling 800 points and nearly 4 lakh crore wiped out in a single session. Here are the 6 key factors, including rupee weakness and global cues, behind the crash.
Rupee slumped 69 paise to an all-time low of 92.18 against the US dollar in early trade on Wednesday, as a sharp spike in crude oil prices amid geopolitical tensions following the escalation of the US-Iran conflict weighed on investor sentiment.
'The MPC is likely to prioritise the key mandate, which is inflation, while relying on other instruments to stabilise the currency and bond markets.'
'Existing investors who have not acted so far may consider holding on to these funds with the understanding that the higher returns they expected from them may now take longer to materialise.'
The Indian banking system's net liquidity surplus has reached a four-year high of Rs 4.57 trillion, driven by maturing government securities, with further maturities expected to push the surplus to around 5 trillion.
The United States has encouraged India to purchase Russian oil already at sea to mitigate supply shortages and price increases amid the West Asia conflict, according to Energy Secretary Chris Wright. This move is described as a short-term effort to stabilise the market without altering Washington's policy towards Russia.
Indian equity markets experienced a volatile session, with the Sensex and Nifty recovering some ground after a significant plunge the previous day. Gains were driven by PSU bank, IT, and metal stocks, but concerns over rising fuel prices and geopolitical tensions limited the recovery.
India's aviation sector is facing fresh turbulence, with rising fuel costs, the Ministry of Civil Aviation's free-seat directive, and geopolitical disruptions in West Asia clouding near-term earnings visibility.
A fall in the Nifty 50 to around 19,000 is not impossible, but that would likely require nuclear options to be exercised.
Investors are keenly awaiting clarity on Reliance Jio Infocomm's IPO, the company's AI and data centre strategies, and next-generation leadership structure at Reliance Industries Ltd's (RIL's) 49th annual general meeting (AGM).
'The March correction was clearly due to the war and with prospects of that coming to a conclusion, there is a natural rally.'
There has been a dramatic decline in oil prices from the high of $147 a barrel in July, to less than a third of that today. However, it is too early to say if this is a fundamental change in the direction of oil prices, resulting from the announced cuts in production by the oil-exporting countries, or a blip in a falling market. The government seems to be assuming (or hoping that it is) the latter and is rushing ahead with its price cut plan.
Airlines are cutting not only international services but also domestic flights, especially on routes projected to remain unprofitable in the coming weeks due to weak demand and high fares.
Indian benchmark stock indices, Sensex and Nifty, experienced a significant decline for the third consecutive day, with the Sensex tumbling 1,092 points and Nifty closing below 24,550. This downturn was primarily driven by the India Meteorological Department's forecast of a below-normal southwest monsoon and ongoing geopolitical uncertainties surrounding the US-Iran ceasefire arrangement.
The price of oil fell in markets around the world on Thursday, from New York to London and Tokyo, as the long-awaited US-led war against Iraq began .
The rise in consumer price index (CPI) inflation could see the Reserve Bank of India (RBI) in an extended pause mode as regards interest rates, and in turn, keep the market rally in check, believe analysts. Signs of inflation cooling off in the US, however, is likely to provide some cushion as the expectations of a change in stance by the US Fed as regards interest rates is likely to aid sentiment. Back home, CPI inflation surged for the first time in five months to 4.81 per cent in June 2023, and was higher than the street's expectations of 4.58 per cent.
Indian markets on Dalal Street rallied sharply as easing tensions in the US-Iran conflict and stable oil prices boosted sentiment. Track Nifty 50 and BSE Sensex performance and key global triggers.
The task of Union Finance Minister Arun Jaitley to keep inflation under check, even when the country reeled under severe drought for two years in a row, and reduce the current account deficit, was made easier by low crude oil prices.
The country's fiscal deficit, as a percentage of GDP, would be wiped out if the crude oil price, as measured with the Indian basket, touch $80 per barrel.
The central bank is yet to consider actions such as a rate hike or mobilising dollar inflows from non-resident Indians to boost forex reserves as it cannot afford to continue with them for long when the rupee's internationalisation tops its agenda, explains Tamal Bandyopadhyay.
The ongoing oil price decline is mainly a result of oversupply in the global market
'What exactly is on the prime minister's mind, we do not know. But it feels like the government wants the country to be prepared for unseen challenges ahead.'
In the present hyper-connected world, there are many domestic and global factors that affect financial markets. Of them, the most powerful and often least predictable are geopolitical events, which often boil down to one diplomatic headline.
Wholesale price inflation (WPI) fell to (-) 1 .21 per cent in October, driven by a decline in prices of food articles like pulses and vegetables, as well as lower fuel and manufactured items' prices, government data showed on Friday.
The drop in oil to around $50 a barrel this year has triggered steep cutbacks in production of US shale oil
'Oil is still well below its all-time highs, and the world is gradually running out of known reserves.'
Benchmark indices tumbled about 2 per cent on Friday, capping one of the most turbulent weeks for domestic equities as investors fretted that the West Asian conflict could drag on for weeks or even months.
Disciplined investors who ignore short-term fear build significant long-term wealth, notes Ramalingam Kalirajan
Reliance Industries Limited (RIL) faced a challenging fourth quarter, with its energy business experiencing significant headwinds, leading to overall muted results and prompting analysts to adjust their outlook, even as consumer segments like Jio and retail demonstrated robust growth.
One of the reasons is that the retail prices are not bench-marked to crude but their respective international benchmark prices.
The rupee appreciated 53 paise to close at 89.67 against the US dollar on Friday, supported by corporate dollar inflows and easing crude oil prices. Forex traders said a positive trend in domestic equities and Brent crude oil prices hovering near $59 per barrel supported the domestic unit at lower levels.
Reliance Industries is expected to report largely flat performance for its fourth quarter (January-March, Q4) of FY26, with weakness in the oil-to-chemicals (O2C) business and muted retail growth likely to offset steady gains in the telecommunications segment.
Indian equity investors experienced a significant loss of 16.32 lakh crore due to a two-day stock market decline fueled by escalating geopolitical tensions involving the US, Israel, and Iran.
The revised projection comes after a 17% rise in the April-June.
Oil prices dipped on Wednesday as the market prepared for a gradual increase of Iranian exports into an already oversupplied market from 2016.
This is the time for India to plan forward fully, with the goal of Atmanirbharata, and energy security. The Persian Gulf is no longer a reliable source, points out Rajeev Srinivasan.
Gold and silver prices experienced a significant drop in the national capital due to a global selloff driven by inflation concerns, central bank policies, and geopolitical tensions.
