Crude Oil Price Surge Capped for Indian Stock Markets: Kotak Securities

Kotak Securities' Head of Equity Research Shrikant Chouhan says surging crude oil prices will be a key ceiling for Indian stock market rallies. He expects strong valuations and support levels near 23,800 to cushion major downsides.

Chouhan outlined scenario-based projections for inflation, GDP, and currency volatility in an exclusive interview with ANI. In the base-case scenario, if crude prices sustain above USD 85 per barrel, it will start impacting the balance of payments, the current account deficit, and eventually inflation.

Retail inflation could climb to 4.8-5.2 percent from 4.1 percent. If crude surges past USD 105 per barrel, real GDP growth could slow to 5.5-5.8 percent.

On the currency front, Chouhan assured that despite macro headwinds, the Indian Rupee is unlikely to breach the triple-digit mark against the US Dollar. In case current crude prices sustain at USD 85 per barrel, then the rupee is expected to maximum depreciate to levels of 97.

However, in case crude prices jump to USD 105, then Chouhan predicts 98 should be the worst-case level. An easing of war tensions could see the currency appreciate back to 94-94.5 levels.