Indian benchmark equity indices Sensex and Nifty experienced a significant crash in early trade, triggered by a sharp increase in crude oil prices and escalating tensions in the Middle East.
The revised projection comes after a 17% rise in the April-June.
The US has granted India permission to buy Russian oil already in transit to ease global supply pressures amidst the West Asia conflict. This decision comes after India agreed to halt sanctioned Russian oil purchases and substitute them with US oil.
The Indian rupee weakened against the US dollar due to rising crude oil prices, geopolitical tensions in the Middle East, and foreign fund outflows.
India's trade account could come under pressure and there could be an inflation push if crude oil prices remain above the $90 per barrel (Brent) for a prolonged period since India imports over 85 per cent of its oil and roughly 50 per cent of its gas. A rebound in economic activity is bound to lead to higher fuel demand. While India is the third-largest importer of crude, it is a net exporter of refined products, which helps to compensate to some degree.
The government has to take a call on reducing or retaining the excise rate.
Will rising tensions between US-Israel and Iran threaten crude oil supply through the Strait of Hormuz, putting India's fuel prices, imports, and economic stability at risk?
China is slowing down, Europe is barely afloat and the US is meeting a larger chunk of its own demand.
Bharat Electronics, Reliance Industries, Mahindra & Mahindra, Larsen & Toubro, InterGlobe Aviation, ICICI Bank and UltraTech Cement were among the other major gainers. Axis Bank, Infosys, Tata Consultancy Services, Trent and Titan were the laggards.
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.
Despite the recovery to above $40 levels after hitting $28-29 in Jan, worries of over-supply in the face of weak demand remain.
State-owned Oil and Natural Gas Corporation (ONGC) has reported a 10 per cent decline in its June quarter net profit on lower oil prices and stagnant production from its aging fields. The company reported a net profit of Rs 8,024 crore in the first quarter of 2025-26 fiscal year, compared to Rs 8,938 crore earning in the same period last year, a company statement said.
One of the reasons is that the retail prices are not bench-marked to crude but their respective international benchmark prices.
Oil firms' borrowings could fall by up to Rs 15,000 cr, govt's subsidy bill by 12% .
A fall in the Nifty 50 to around 19,000 is not impossible, but that would likely require nuclear options to be exercised.
The recent surge in crude oil prices could shave off the gains made by India Inc in profit margins in the past few quarters. Worse, it comes at a time when consumer demand in the country is slipping and major global economies are witnessing a slowdown. A back-of-the-envelope calculation suggests that the margin expansion accounted for three-fourths of the rise in the listed firms' operating profit between the April-June quarter (Q1) of FY23 and Q1FY24, and only a quarter of profits gains came from revenue growth.
A senior government official asserts India's independence in purchasing Russian oil, stating that US sanctions waivers merely remove friction but do not dictate India's energy policy. The official highlights India's commitment to energy security and affordability for its citizens.
Replacing over a third of India's oil imports at competitive rates is going to be a challenge, said traders from State refiners, even though some progress was made in the last two months.
Crude oil prices could dip to the low $60s by the end of 2025 after rising to $80 a barrel in the last quarter (October-December) of 2024 - up nearly 10 per cent from current levels, suggest analysts at JP Morgan. The main players in West Asia, including Saudi Arabia and the UAE, have a strong incentive to keep the conflict contained, according to the JP Morgan report.
India is preoccupied with analysing the US sanctions, which may cut off India's access to discounted Russian crude and force it to buy at market prices.
Sensex and Nifty post steepest weekly loss in over a year, falling nearly 3 per cent.
The government has raised the windfall profit tax levied on domestically produced crude oil as well as on the export of diesel and ATF, in line with firming international oil prices, according to an official order. The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been increased to Rs 2,100 per tonne from Rs 1,700 per tonne, the order dated January 2, said. Crude oil pumped out of the ground and from below the seabed is refined and converted into fuel like petrol, diesel and aviation turbine fuel (ATF).
Analysts predict continued volatility in Indian equity markets due to domestic macroeconomic data, F&O expiry, global developments including US tariff policies, and geopolitical tensions.
The Kremlin has stated that India is free to purchase oil from any country, dismissing claims that India agreed to reduce Russian oil imports. Russia maintains that energy trade with India benefits both nations and contributes to international energy market stability.
Economics and politics both have major roles in determining oil prices.
The government has reduced the windfall profit tax levied on domestically-produced crude oil as well as on the export of diesel and ATF, in line with softening international oil prices, according to an official order. The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been cut to Rs 1,900 per tonne from Rs 2,100 per tonne, the order dated January 16, said. Crude oil pumped out of the ground and from below the seabed is refined and converted into fuel like petrol, diesel and aviation turbine fuel (ATF).
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.
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.
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.
External Affairs Minister S Jaishankar discussed the West Asia conflict and its impact on energy supplies with his Russian counterpart Sergey Lavrov and EU's Foreign Policy chief Kaja Kallas.
The public has benefited from this decline in crude oil, which has translated into lower prices of petrol and diesel.
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.
Higher crude oil prices also translate into better corporate earnings for India's top companies
The rupee declined 31 paise to settle at 90.65 against the US dollar on Friday, weighed down by geopolitical uncertainties over the US-Iran talks, and a sharp rise in global crude oil prices.
India will restrict crude oil purchases from Russia as part of an agreement reached with the US in exchange for lower trade tariffs, sources said, adding imports will continue for now by refiners such as Nayara Energy, which have no other alternative source. US President Donald Trump announced overnight that the United States will cut the reciprocal tariff on imports of Indian goods to 18 per cent from 25 per cent under a broader bilateral understanding.
India, the world's third-largest oil consumer, spent 2.5 billion euro on buying crude oil from Russia in September, 14 per cent less than the previous month, a European think tank said. India remained the second-largest buyer of Russian fossil fuels in September behind China, according to the Centre for Research on Energy and Clean Air (CREA).
The basket of crude oil that India buys has hit a decade high of $121 per barrel, but retail selling prices of petrol and diesel continue to remain frozen. The Indian basket on June 9 touched $121.28, matching levels seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC). As per the PPAC, the Indian basket of crude oil averaged $111.86 per barrel between February 25 and March 29 - the immediate period after Russia's invasion of Ukraine sent oil on fire.
'Oil is still well below its all-time highs, and the world is gradually running out of known reserves.'
Analysts predict a surge in gold and silver prices as investors seek safe-haven assets due to escalating tensions in the Middle East. The impact on domestic prices will depend on the conflict's duration, with geopolitical factors and macroeconomic data also playing a role.
After a three-month slowdown, India's oil imports (already landed) from Russia bounced back in the first 15 days of October to 1.8 million barrels per day.
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