Brent crude near $115, Indian basket close to $120 as markets come under pressure

Rising crude oil prices and weak global signals have deepened the worries of investors in the Indian stock market. Brent Crude is trading at around $115 a barrel in the international market, while the Indian crude basket, which is important for India, has reached $119.99. Costlier oil is feared to hit the country's import bill, inflation and the profits of oil companies. All eyes are therefore on whether petrol and diesel prices will go up.

Brent Crude has jumped sharply since the war between the US and Iran began. In the previous session the price rose as high as $117.41 a barrel before closing at $116.72. According to data available on Monday, the price was down 1.55 per cent, trading at about $114.91.

Attacks by Houthi rebels in Saudi Arabia have raised fears of disrupted oil supply. This is lending support to crude prices in the global market. The price has eased a little but remains at a high level.

For India, it is not only the international Brent rate that matters. The price of the crude the country actually buys is just as important. According to the data, the Indian crude basket was recorded at $119.99 a barrel on October 22. The average price for October is also reported to be about $120. India imports crude oil on a large scale, so higher prices directly affect the import bill. This can put pressure on the rupee and leaves room for inflation to rise.

Costlier crude is raising the costs of oil marketing companies. According to available information, the companies are bearing losses of more than Rs 500 crore a day. They are estimated to be losing Rs 8 a litre on petrol and Rs 9 a litre on diesel. In addition, an under-recovery of Rs 300 on every LPG cylinder has been reported.

A rise in petrol and diesel prices is considered unlikely during the festival season. Still, if crude prices stay high for long, the companies could pass the higher costs on to customers. However, the data carries no information on any firm decision on raising fuel prices having been announced.

On Friday, US stock markets fell sharply. The Dow Jones Industrial Average closed 652.82 points, or 1.23 per cent, lower at 52,215.16. The S&P 500 fell 0.52 per cent and the Nasdaq Composite 0.21 per cent.

Asian markets also showed pressure on Monday. Japan's Nikkei 225 slipped about 0.26 per cent, South Korea's KOSPI 0.92 per cent, China's Shanghai Composite 0.36 per cent and Singapore's Straits Times 0.43 per cent. Hong Kong's Hang Seng, however, was trading 0.31 per cent higher.

At 7:36 am on Monday, GIFT Nifty stood at 22,599.50, down 8.50 points, or 0.04 per cent, from the previous close. This indicated that the Indian stock market could open almost flat. However, the market's movement may change once actual trading begins.

The US Federal Reserve's meeting on October 27 and 28 this week will also be important for investors. Global markets will watch the stance the Fed takes on inflation and interest rates amid rising energy prices. Crude prices, movements in world markets and the Fed's decision could affect the Indian stock market. Investors will therefore need to be cautious in trading.