Crude is now less rude: What $90 oil means for your stocks, rupee, Indian economy
Why it matters: India's Nifty index, down 12% year-to-date, offers attractive valuations at a 12% discount to its five-year average.
- Macquarie forecasts Brent crude to stay in the $85–$90 range, gradually moving towards $110, even with de-escalation, due to slow normalization of Strait of Hormuz flows.
- Ajit Mishra (Religare Broking) expects crude to trade between $80–$85 (downside) and $95–$100 (upside) in the near term, with a gradual move towards $80 possible if supply improves and demand softens.
- Ambit emphasizes a physical market deficit of around 7 mbd and urgent strategic petroleum reserve restocking, indicating a deeper repricing of geopolitical risk in energy supply.
- Jefferies notes the Nifty’s 12-month forward P/E has compressed to 17x, a 12% discount to its five-year average, making valuations attractive after a 12% year-to-date decline.
- Sanjeev Prasad (Kotak Institutional Equities) suggests earnings downgrades for FY2027E and FY2028E could be limited if the Iran-Israel/US conflict resolves within 2–3 weeks.
- Foreign institutional investors (FIIs) pulled nearly Rs 1.2 lakh crore (over $12 billion) from Indian equities in March, marking the worst monthly selloff in market history, as noted by V K Vijayakumar (Geojit).
- Sahil Kapoor (DSP Mutual Fund) highlights that foreign investors now see more reasonable valuations, cheap quality stocks, and the Indian rupee near one of its weakest real effective exchange rate levels.
Despite a temporary ceasefire, crude oil prices are expected to remain elevated in the $85–$90 range, potentially climbing to $110, as geopolitical risks and supply tightness persist, according to Macquarie and Religare Broking. This sustained high-price environment, driven by a physical market deficit and strategic reserve restocking needs, represents a deeper repricing of geopolitical risk rather than a temporary spike, as highlighted by Ambit.
