The Indian rupee weakened against the US dollar due to sustained foreign fund outflows and uncertainties in West Asia, although lower crude oil prices and a positive opening in domestic equity markets limited the losses.
Prime Minister Narendra Modi has offered India's support to bring peace to West Asia during talks with UAE President Sheikh Mohamed bin Zayed Al Nahyan. Both countries signed agreements to strengthen strategic collaborations in energy and defence.
The Reserve Bank of India (RBI) has opted to keep its key interest rates unchanged at 5.25%, anticipating a global economic recovery following a ceasefire in the US/Israel-Iran conflict, despite ongoing inflationary pressures and currency fluctuations.
Foreign investors have withdrawn over Rs 88,000 crore from Indian equities this month, driven by geopolitical tensions, a weak rupee, and concerns about rising crude oil prices.
Foreign investors have withdrawn a record Rs 1.14 lakh crore from Indian equities in March, driven by geopolitical tensions, a weakening rupee, and concerns about crude oil prices.
'Once the currency goes out of the hand, then possibly your major challenge is that it will not come back.'
India is in communication with Iranian officials to ensure the safety and secure passage of its ships through the Strait of Hormuz, following recent firing incidents involving Indian vessels.
Mcap of top 6 most valued firms drops nearly Rs 65k cr; Airtel biggest laggard
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 has raised concerns with Iran over the safety of merchant shipping after two vessels were fired upon in the Strait of Hormuz, prompting them to turn back.
24 Indian-flagged vessels with 677 Indian seafarers were currently located west of the Strait of Hormuz, and four vessels with 101 Indian seafarers were stationed east of the strategic waterway.
The United States has temporarily lifted sanctions on the sale of Iranian oil already in transit to ease soaring global crude prices, making 140 million barrels available to the market.
A prolonged supply shock can transmit to lower incomes, and dampen confidence and sentiment, warns Aditi Nayar, chief economist, head-research and outreach, ICRA.
Indian benchmark equity indices, Sensex and Nifty, rebounded on Wednesday, recovering intraday losses, primarily driven by strong fag-end buying and a significant rally in blue-chip Reliance Industries.
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 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.
India is set to reduce its direct imports of Russian crude from late November, following new US sanctions on Rosneft and Lukoil, effective November 21.
The Indian rupee depreciated significantly against the US dollar, reaching a new all-time low due to rising oil prices, a strong dollar, and ongoing geopolitical concerns. Domestic equity market declines and foreign investment outflows further contributed to the rupee's weakness.
Private-sector oil refiner Reliance Industries Limited (RIL) last week received a general licence from the United States (US) government to buy Venezuelan oil, an industry executive said.
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.
India's fiscal deficit is projected to reach 4.5 per cent of GDP for the current fiscal year, exceeding the budgeted target, as the government's policy responses to the West Asia conflict are expected to strain public finances, according to research firm BMI.
'The West Asia or the Gulf crisis has shown that what we develop as national infrastructure when things are not as bad as they could be, we forget to plan for adversities.'
The incident came shortly after a spokesperson from Iran's military warned that Tehran could target ports and docks in the United Arab Emirates following recent United States strikes on Kharg Island, a key hub for Iran's oil exports.
Following Prime Minister Modi's appeal, Delhi ministers are adopting measures like using public transport, electric vehicles, and virtual meetings to reduce fuel consumption and cut expenditure.
Reliance Industries Ltd, India's largest buyer of Russian oil and most impacted by the latest US sanctions, on Friday said it will comply with all applicable restrictions and will adjust its refinery operations to meet compliance requirements.
'Markets never fully lose hope. But an important shift could come if the Strait remains closed -- moving from high prices to no prices.'
India has condemned the escalating attacks on commercial shipping in West Asia, particularly after a Thai-flagged vessel en route to India's Kandla Port was targeted in the Strait of Hormuz. The attacks have disrupted global oil and gas supplies, impacting India's energy imports.
India summoned the Iranian envoy after two Indian vessels had to reverse course in the Strait of Hormuz following an incident of firing by Iran's Revolutionary Guards.
Bessent indicated that the U.S. is evaluating the status of Iranian oil as the current campaign progresses.
Modi said that the West Asia crisis has been going on now for more than three weeks and is having a very adverse impact on the global economy and on people's lives. He said the entire world is urging all parties for the earliest resolution of this crisis.
Higher crude oil prices also translate into better corporate earnings for India's top companies
Sensex gains over 400 points while Nifty trades above 23,800 amid strong IT sector buying.
Trump said that the strait will be "open very soon" if ongoing negotiations with Tehran continue successfully.
Indian stock markets recovered from early losses to close higher, driven by value buying in IT and banking shares and a rebound in the rupee.
The initial cost of the reserve, expected to become operational by 2012, was estimated at Rs 2,400 crore (Rs 24 billion), excluding the cost of crude oil. Strategic Petroleum Reserves Ltd, special purpose vehicle that is implementing the project, has asked Engineers India Ltd to work on the revised cost," said sources. EIL is the management consultant for this project.
Moody's Ratings has downgraded India's growth forecast for financial year 2026-27 (FY27) to 6 per cent from 6.8 per cent, attributing the revision to weaker consumption and industrial activity, elevated energy prices, and rising input costs stemming from the West Asia conflict.
US President Donald Trump warned India about potential tariffs for continuing to purchase oil from Russia, claiming he received assurances from Prime Minister Narendra Modi that India would halt such purchases.
The Iran conflict led to a sharp correction in Reliance Industries Ltd's (RIL's) share price, which has been partially reversed by a rebound.
According to the Pentagon, the vessels were targeted as part of efforts to prevent the deployment of naval mines in the strategically vital passage through which a significant portion of global crude oil shipments transits.
Markets will look for clear guidance on how the MPC interprets the uncertainty and what it implies for the future course of monetary policy, points out Rajeswari Sengupta.
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