Mumbai, May 18: Rising crude oil prices have emerged as a significant concern for financial markets. The threat of inflation, increasing bond yields, and foreign investment withdrawals are putting pressure on stock markets. This was stated by Shrikant S. Chauhan, Head of Equity Research at Kotak Securities, during a conversation with a news agency on Monday.
Chauhan noted that crude oil prices remain persistently high, with no signs of relief in sight. Over the weekend, oil prices saw an increase of about $2 to $3.
He emphasized, “As long as crude oil prices remain elevated, inflation concerns will dominate global markets.” The continuous pressure from rising inflation is causing a rapid increase in bond yields, particularly in the United States.
Referring to last week’s developments, Chauhan mentioned a sharp rise in bond yields for 10-year, 20-year, and 30-year durations in the U.S. He stated, “These bond yields are now heading towards extraordinary levels. Whenever such a trend occurs, significant investments start flowing into the bond market.”
During the discussion, Chauhan explained that higher returns on bonds in developed countries lead to increased capital outflows from emerging markets like India, as global investors gravitate towards safer debt instruments in markets such as the U.S. and Japan.
He warned, “Due to these global challenges, the Indian stock market may remain within a limited range in the near future.”
Speaking about the activities of foreign institutional investors (FIIs), he noted that the continuous selling by foreign investors is linked to global uncertainty and rising crude oil prices.
Chauhan also mentioned that if crude oil prices remain at levels between $105 and $110 per barrel, the impact on the global economy will become more pronounced. He highlighted that expensive crude oil is weakening the currencies of several countries, raising concerns for energy-importing emerging economies.
He concluded, “High crude oil prices, rising bond yields, and ongoing foreign investment withdrawals are creating a challenging environment for global stock markets, including India.”
My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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