Indian stock market investors are facing a challenging global backdrop, with crude oil prices trading above $100 per barrel and uncertainty surrounding the upcoming US midterm elections adding to concerns over inflation, foreign fund flows and corporate earnings. US midterm elections are scheduled for Tuesday, 3 November, 2026.
After experiencing sharpest monthly decline of the year in September, both benchmark indices Sensex and Nifty 50 have seen a volatile, net-positive recovery in October so far.
Despite experiencing intraday pullback pressure past the middle of the month due to sustained FII selling, elevated crude oil prices, and rising global bond yields, the BSE Sensex has risen by 770 to 1,200 points (~1.1% to 1.7%) to trade near the 73,250–73,700 range.
Concurrently, the NSE Nifty 50 has gained roughly 50 to 190 points (~0.2% to 0.8%) to sit around the 22,670–22,810 band so far in October.
Market experts believe the combination of expensive crude oil and global political uncertainty could weigh on the Sensex and Nifty 50 in the near term. However, the direction of oil prices after the US midterm elections could prove crucial for market sentiment, depending on how the US-Iran standoff and the situation around the Strait of Hormuz evolve.
US election impact on crude oil prices
The upcoming US midterm elections could prove to be an important trigger for crude oil prices, particularly amid continuing tensions between the US and Iran and uncertainty over the Strait of Hormuz, a key route for global oil shipments.
Brokerage firm JM Financial said the 3 November elections could become a decisive catalyst in breaking the deadlock between the US and Iran. The outcome could influence the balance of power in the US Congress and determine Washington’s ability to sustain its military and economic pressure on Tehran while pursuing a nuclear agreement.
According to the brokerage, if the incumbent Republican Party loses control of Congress, domestic political pressure to bring down global fuel prices could encourage the US administration to pursue a quicker diplomatic settlement. A negotiated agreement that leads to the reopening of the Strait of Hormuz could ease supply concerns and help moderate crude oil prices.
JM Financial, however, sees scope for Brent crude prices to moderate towards $80 per barrel over the medium term if oil flows through the Strait of Hormuz normalise, either through military action or a negotiated settlement. Even then, the brokerage expects prices to remain supported over the next 12 months by restocking demand, higher freight costs, a geopolitical risk premium and fees charged by Iran.
Rising crude oil, US election uncertainty impact on Sensex, Nifty 50
Seema Srivastava, Senior Research Analyst at SMC Global Securities, said crude oil above $100 per barrel, combined with heightened US election uncertainty, creates a double whammy for Indian equities and keeps market sentiment under pressure.
She explained that expensive crude oil can widen India’s current account deficit (CAD) and weaken the rupee against the US dollar. Currency depreciation, coupled with higher transportation and raw material costs, could push up domestic inflation and limit the Reserve Bank of India’s flexibility to cut interest rates.
The impact could also be visible in corporate earnings. Companies in sectors such as paints, aviation, specialty chemicals, logistics and automobiles could face margin pressure because of higher crude-linked input costs.
Srivastava said this risk-off sentiment could intensify foreign institutional investor (FII) outflows from Indian equities. Even though domestic institutional investors (DIIs) and retail systematic investment plan (SIP) inflows provide structural support to the market, sustained selling by foreign investors in heavyweight stocks, particularly in the information technology and private banking sectors, could limit the upside in benchmark indices.
According to Srivastava, Indian markets could remain under sustained pressure until crude oil prices retreat from elevated levels and geopolitical uncertainty eases.
A meaningful moderation in oil prices could help relieve pressure on India’s macroeconomic outlook, while greater clarity on US policy could improve global risk appetite, she added.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
