Oil Rally and Faster Inflation Snap India's Three-Day Stock Gains

what happened

Indian stock benchmarks ended a three-session winning run on Friday, according to a report from Moody's. The BSE Sensex dropped 318.56 points, or 0.39%, to 81,592.45, while the NSE Nifty 50 slid 155.05 points, or 0.61%, to 25,144.30.

Brent futures climbed to roughly $95.5 a barrel from about $92, as attacks on Saudi energy facilities and interruptions to tanker traffic through Hormuz raised fears for supply. India's retail inflation reached 6.09% in October, moving above the RBI's 6% upper tolerance for the first time in two years, and food prices accelerated to 8.94%. Investors worry the central bank could raise rates at its next policy review.

Despite Friday's decline, both indices still gained over the week, with the Sensex up 0.7% and the Nifty up 0.45%.

why it matters

For India, expensive crude means higher import bills, pressure on the rupee and the current account, and a greater chance of tighter monetary policy. Realty, auto and cement shares fell the most, while banks, financial firms and metal stocks also lagged. An SBI Securities analyst flagged 24,850 points as a key level to watch.

market impact

India equities: inflation and rate-hike risk pressure the Nifty 50 and Sensex

• ▼Nifty 50 pressure down — rate-hike risk and rising inflation weigh on investor sentiment
• ▲Brent pressure up — attacks on Saudi facilities and Hormuz disruptions constrain global supply
• ▼Indian rupee pressure down — costlier crude worsens India's external balance and current account

instruments