The Indian benchmark indices traded lower on Friday as the Sensex declined 120 points to close trade at 74,781 and the Nifty ended 42 points lower to settle at 23,435 at 3:30 PM.
Brent crude has climbed to its highest level since May as the ongoing US-Iran conflict continues to disrupt oil flows from the Middle East, putting fresh pressure on global markets and raising concerns over India's economic outlook.
For India, crude prices approaching USD 110 a barrel could further intensify pressure on inflation, the rupee, the current account and corporate margins, while also reducing the scope for monetary easing, Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a Research Analyst firm, said.
Global markets are trading lower as elevated oil prices intensify concerns over inflation and the interest-rate outlook, he added.
Asian Markets Trade Lower
Asian markets came under pressure amid the rise in oil prices. South Korea's Kospi, Japan's Nikkei 225 index, Shanghai's SSE Composite index and Hong Kong's Hang Seng index traded significantly lower.
US markets also ended in negative territory on Thursday.
WTI crude is trading in the USD 103–104-per-barrel range after rising around 7.5% in the previous session, while Brent has moved towards the USD 108 mark amid escalating tensions involving Houthi forces and Saudi Arabia.
Higher Crude Prices Raise India Concerns
The sharp increase in crude prices is likely to heighten concerns over India's import bill, inflation and corporate margins, keeping risk appetite subdued, Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.
For India, the sustained rise in crude prices could therefore add to pressure on several key economic indicators and corporate profitability.
FIIs Sell Rs 438.24 Crore In Equities
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 438.24 crore on Thursday, according to exchange data.
Despite the selling pressure, Indian benchmark indices ended higher in the previous session.
The Sensex advanced 138.36 points, or 0.19%, to settle at 74,902.59 on last-minute buying.
The Nifty edged higher by 46.30 points, or 0.20%, to end at 23,477.80.
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