Indian Markets Show Resilience Amid Rising Oil Prices
Indian benchmark indices Sensex and Nifty closed the week higher, gaining up to 0.5%, despite broader market declines driven by rising crude oil prices. Investors are closely monitoring oil price fluctuations, foreign institutional investor activity, and global market trends.
Indian benchmark indices Sensex and Nifty ended the week on a positive note, with the Sensex rising 308 points to close near 74,460 and the Nifty 50 advancing 116 points to settle at 23,053. This uptick occurred despite broader market declines, as the Nifty Midcap 100 and Nifty Smallcap 250 indices fell by up to 2% amid surging crude oil prices, which have exceeded $117 a barrel.
Oil prices have climbed 14% in October, reaching their highest levels in six months, primarily due to concerns over escalating conflicts in the Middle East. Analysts predict further volatility in oil markets, with Goldman Sachs estimating that prices could rise to $120 a barrel if tensions increase, while a return to normal exports could see prices drop to around $80.
In a notable shift, foreign institutional investors (FIIs) turned net buyers after a 10-week selling streak, purchasing equities worth Rs 6,305 crore. This change in sentiment has contributed to a recovery in the Nifty, which has reclaimed the 23,000 mark. VK Vijayakumar, chief investment strategist at Geojit Investments Ltd, highlighted that favorable interest rate decisions by the US Federal Reserve and attractive valuations in the Indian market are supporting this positive outlook.
The Indian rupee also strengthened against the US dollar, closing at 94.95, marking its best monthly gain since February. However, the currency remains under pressure from high crude oil prices and ongoing foreign portfolio outflows.
Despite the broader market weakness, analysts noted signs of buying interest in the Nifty Midcap and Smallcap indices, which have experienced pullbacks from lower levels. Immediate support levels for these indices are identified at 56,500-56,400 for the Nifty Midcap 100 and 18,100-18,000 for the Nifty Smallcap 100. Technical indicators suggest that the Nifty may be poised for a more meaningful recovery if it holds above critical support levels.