The Bombay Stock Exchange, right, stands on Dalal Street. (Photographer: Vivek Prakash/Bloomberg)

Higher Oil Erases India Equity Gain on Economy, Earnings Concern

(Bloomberg) --

Indian equities reversed gains as oil continued rising for a third day, stoking concerns about an impact on the economy and profits at some companies. The third-biggest economy in Asia imports almost 80 percent of its oil requirement.

The benchmark S&P BSE Sensex declined 0.2 percent to 38,564.88 at the close in Mumbai, erasing an advance of as much as 0.5 percent earlier in the day. The NSE Nifty 50 Index slid by a similar magnitude. Both the gauges retreated a third day, their longest losing streak in at least a month.

The India NSE Volatility Index rose a sixth day, staying at its highest level since February 2016. Rising oil -- Brent for June settlement climbed as much as 0.8 percent today to $74.70 a barrel on the London-based ICE Futures Europe exchange -- added to anxiety over the outcome of ongoing general elections.

Higher Oil Erases India Equity Gain on Economy, Earnings Concern

Strategist View

  • “Oil inching toward $75 a barrel is discomforting for investors in Indian assets as it fuels concerns of a strain on the nation’s fiscal and trade accounts and a fall in its currency,” said Sushant Kumar, an equity fund manager at Raay Global Investments Pvt.
  • “This, combined with the ongoing elections and speculation about the outcome on May 23, are the major overhangs on the sentiment,” he said.

The Numbers

  • Twelve of the the 19 sector indexes compiled by BSE Ltd. retreated, led by a gauge of telecommunication stocks.
  • Maruti Suzuki India Ltd.’s 3.7 percent decline was the steepest among Nifty members. The nation’s biggest carmaker is expected to report a 6 percent drop in its January-to-March earnings from a year earlier later this week, according to data compiled by Bloomberg.
  • Twenty-one of the 31 Sensex members and 31 of the 50 Nifty companies fell.

Analyst Notes/Market-Related Stories

  • How Trump’s Stifling of Iran Waivers Affects the OPEC+ Oil Cuts
  • Rising Crude Oil Prices Are Bad News for Indian Rupee: Economics
  • Traders Await RBI’s $5b Currency Swap Auction: Inside India

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