High crude oil prices just one worry for India; let`s not ignore the other risks

For a country that imports the lion’s share of its oil requirements, high prices are never good news. So, when Brent crude prices rose to over $75 a barrel, there was some worry on the Street.

NSE’s volatility index (India VIX), often referred to as a fear gauge, surged to a three-year high of 24.6 on Tuesday. Analysts said this was due to a combination of high oil prices and the anxiety surrounding the ongoing general elections. Also, the rupee breached the 70 mark against the dollar.

While oil prices have receded to about $72.15 a barrel, it must be noted that they are about 34% higher so far this year. The rise in oil comes against the backdrop of unimpressive corporate results, low job creation, a slowdown in domestic consumption, fears of a subpar monsoon and muted private sector capital expenditure (capex).

Election-related nervousness has kept Indian equities volatile. Even so, the S&P Nifty 50 index has increased by about 8.21% so far this year.

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