Indian Markets Expected to Recover Amidst Crude Price Fluctuations

A recent report suggests that Indian markets are likely to recover as crude oil prices stabilize. The Indian rupee is expected to strengthen, and bond yields may decrease. However, potential challenges remain if oil prices rise significantly. The report highlights the need for government intervention to mitigate losses in the oil sector. Discover more about the implications for India's economy and investment opportunities.

By Narendra Chaudhary Mar 24, 2026, 13:12 IST

Market Recovery Insights

New Delhi, March 24: A report indicates that Indian markets are poised for a smart recovery as the crude oil surplus diminishes and price-earnings (P/E) ratios begin to stabilize.

According to Emkay Global Financial Services, the Indian rupee is anticipated to strengthen towards Rs 91 against the US dollar, while the yield on 10-year government bonds is expected to decrease to approximately 6.65% from the current 6.83%, with a normalization period of two to three months.

"The Nifty index has dropped by 5% over the past three trading days, mainly due to ongoing selling by foreign portfolio investors (FPIs). We predict a reversal of this trend, positioning India as a favorable investment destination in the region," the report stated.

Nevertheless, if Brent crude averages $80 per barrel in FY27, it could reduce India's GDP growth to 6.6%, while inflation and the current account deficit may rise to 4.3% and 1.7% of GDP, respectively.

In the event of a more severe terms-of-trade shock, with Brent prices exceeding $100 per barrel, the current account deficit could surpass 2.5%, leading to a balance-of-payments deficit estimated at around $85 billion.

Although oil and natural gas prices have increased, they remain below levels that would typically indicate a significant shock of this magnitude and duration, according to the report.

Brent crude at $85 per barrel is expected to be manageable, but the macroeconomic impact would intensify if prices exceed $100 per barrel, the report added.

The simulation model suggests that at current oil prices, the government may need to reduce excise taxes by approximately Rs 19.5 per liter on average blended diesel and petrol, and absorb an additional subsidy on LPG estimated at Rs 1 trillion to fully offset the losses incurred by oil marketing companies (OMCs). This excise tax reduction would result in a fiscal cost of nearly 1.1% of GDP.