Indian Markets Likely to Recover as Crude Oil Pressure Eases: Report
New Delhi, March 24, 2026 – Indian equity markets are likely to witness a smart recovery as the pressure from crude oil prices eases and price-to-earnings (P/E) premiums moderate, according to a report by Emkay Global Financial Services.The report projects that the Indian rupee could strengthen towards Rs 91 per US dollar, while the 10-year government bond yield may ease to around 6.65% from the current 6.83%, with normalization expected over the next two to three months.
However, the outlook remains sensitive to global crude oil prices. The report noted that an average Brent crude price of $80 per barrel in FY27 could reduce India’s GDP growth to 6.6%, while pushing inflation to 4.3% and the current account deficit (CAD) to 1.7% of GDP.
In a more adverse scenario, where Brent crude exceeds $100 per barrel, the CAD could rise beyond 2.5% of GDP, potentially leading to a balance-of-payments deficit of around $85 billion.
Despite recent increases, oil and gas prices remain below levels typically associated with severe economic shocks. A Brent price of $85 per barrel is considered manageable, though the macroeconomic impact would intensify if prices cross the $100 mark.
The report also highlighted potential fiscal implications, estimating that the government may need to cut excise duties by around Rs 19.5 per litre on petrol and diesel and absorb additional LPG subsidies of about Rs 1 trillion to offset losses faced by oil marketing companies (OMCs). Such measures could result in a fiscal cost of nearly 1.1% of GDP.
Overall, easing oil prices and improving macro indicators could support a rebound in Indian markets, though global energy trends remain a key risk factor.
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