Oil-Driven Inflation Trumps Fed Worries for Indian Equities
According to Sonam Srivastava, founder and fund manager at Wright Research, the Reserve Bank of India (RBI) has more policy room than it may appear. The real constraint is oil-driven inflation, not the US Federal Reserve, she said.
The RBI's October 5-7 policy meeting could end in a hold accompanied by a harder tone if headline retail inflation moves towards 6 percent, but if crude stabilises and inflation peaks as forecast, the central bank could retain the option of easing policy in the second half of FY27 even if the Fed remains hawkish.
The Indian equities market has been affected by several factors, including crude oil prices, which have risen to near $95 a barrel. The rupee has also strengthened, reaching 96 against the US dollar, and foreign portfolio investor (FPI) flows have turned negative.