India Biggest Winner if Global Oil Prices Cool Further, Says Expert

Indian markets began the week on a strong note on Monday as easing geopolitical tensions in West Asia boosted investor confidence. Optimism grew after reports suggested progress in talks involving the United States and Iran, raising hopes that the ongoing regional crisis may soon ease.

According to stock market expert Sunil Shah, the decline in global crude oil prices is the biggest positive trigger for India’s economy and equity markets.

“Well, this was on expected lines that the market will open and start the week on a positive note and a bullish note. The reason being that during the weekend we saw that there are very bright and good chances that the crisis in West Asia will be diffused very soon. We've seen statements coming from the president of USA and other people who matter,” Shah told ANI.

Oil Prices Fall Sharply Below USD 99 Per Barrel

Global crude oil prices dropped sharply at the start of the week, falling more than 5 per cent and slipping below USD 99 per barrel. The decline came amid reports that Iran had agreed in principle to reopen the Strait of Hormuz and dispose of its stockpile of highly enriched uranium under a developing agreement with the United States.

The sharp correction in oil prices is significant for India, which imports a majority of its energy needs.

“The key reason is that because of this [US-Iran peace talk], the oil prices have cooled off. India is the largest beneficiary. The oil prices come back to those original levels, and they remain benign for at least near to midterm, then India will be the largest beneficiary of those low energy prices. And our economic growth will be back on that higher growth trajectory. Also the worry regarding the corporate top line and the bottom line will also be blown away,” Shah said.

Why Lower Oil Prices Matter for India

Lower crude oil prices have a direct impact on India’s inflation, fiscal health and consumer spending. Cheaper energy imports reduce pressure on fuel prices and transportation costs, which can eventually support consumption and business activity.

Shah said crude oil remains the key driver for market sentiment at the moment.

“The reference point is crude oil prices for this market. So, as the crude oil prices go down further and further, markets will improve from there because the low energy prices will help our economy in a huge way that will boost consumption. Basically, we will not have to deal with high inflation and that will allow our economy to grow at the forecast which we had, which were predicted and made, or the prognosis was made before the Iran war,” Shah explained.

Impact on Corporate Earnings and Foreign Investments

Shah also noted that lower energy prices could improve both corporate revenues and profitability by reducing input costs across sectors.

He added that foreign capital outflows from India in recent quarters were linked to investor interest in artificial intelligence-focused opportunities elsewhere in Asia.

“In India, for quite some time in the last few quarters, we've seen the theme has been AI and India does not have a pure play AI and that's the reason that the capital was going out of our country and moving to those countries in Southeast Asia and other countries where they have AI play.”

However, Shah believes foreign investments could return once Indian valuations become more attractive.

“But I'm sure once the valuations become very attractive, the capital will come back,” Shah added.

Fuel Price Hikes May Ease if Crude Remains Stable

India recently witnessed multiple fuel price hikes amid volatility in global energy markets. Shah said those increases were expected given the geopolitical tensions and rise in crude prices.

“Fuel price hike was on expected lines, but as I said, if the international crude oil price is corrected, then we will not need any further hike,” Shah said.

(With inputs from ANI)