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Why Indian Markets Soar Despite Crude Oil Price Rise

The reasons why the Indian market soars despite the crude oil price rise

Why Indian Markets Soar Despite Crude Oil Price Rise
Why Indian Markets Soar Despite Crude Oil Price Rise
outlookindia.com
2018-08-03T14:48:43+05:30

Markets are poised at an all time high, with a decent surge of around 1,300 points in a span of four months in Nifty. What’s the reason behind this sudden surge? What is driving the market, despite several headwinds such as the crude oil situation and falling exports from India?

Let’s take rising crude oil prices first. There has been no inh­erent growth in global crude oil consumption. The crude oil economy is growing at the rate of 1 per cent in the global market despite of recoveries everywhere, including the 4.1 per cent growth in the US economy. High crude prices will not be able to sustain for too long. Currently, higher crude prices, that are hurting the Indian economy, are largely because of the oil emb­argo on Iran and due to OPEC (Organisation of the Petroleum Exporting Countries) taking advantage of the situation.

The high price on crude oil products is eventually passed on to consumers. The way I see it—the prices of petroleum products are currently same, as they were in 2014-15, however, the spending power of people has increased. The per capita income has incr­eased from $1,631 in 2014 to $1,753 in 2018. Thus, the increase in oil prices is not pinching the consumers anymore.

Then there are exports, which are not picking up due to global factors. The US is trying to focus on its dome­stic economy for manufacturing. Alth­ough expecting that the US buys from India while India does not import from the US is incorrect. India is trying to setup projects such as Make in India to minimise imports. Similarly, other countries are trying to replicate such projects to boost their own production and become self-dependent, thereby reducing imports. The potential of double-digit growth is driving India to a strong position in the world economy and investors are comforted and believe...

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