Despite elevated crude oil prices driven by persisting concerns over the stalled US-Iran talks, foreign capital outflows, the rupee’s weakness and mixed Q4 earnings, the Indian stock market has staged a significant recovery in April.
Looking set to snap their four-month losing streak, equity benchmarks, the Sensex and the Nifty 50, are up over 8% so far in April. This rebound has largely been driven by value buying after the sharp more than 11% decline in March. Year-to-date, the Nifty 50 is down 8%, while over the last year, it is flat.
On Wednesday, 29 April, the NSE barometer jumped 1.40% during the session to hit an intraday high of 24,332. The market appears to be discounting that the worst in terms of geopolitical conflict could be behind.
Indian stock market outlook: A sustained rally ahead?
While hopes are high that the US and Iran will soon find a way to end their conflict, there is no clarity on when the two sides will sit down again for negotiations.
US President Donald Trump is reportedly unhappy with the fresh proposals made by Iran as it does not include the West Asian country’s nuclear programme. According to the Wall Street Journal, Trump has asked aides to prepare for an extended blockade of Iran.
Brent Crude prices remain above the $110 per barrel as the Strait of Hormuz remains effectively closed.
According to media reports, Iran has said commercial traffic through the Hormuz Strait will resume only after the conflict with the United States and Israel ends and maritime security is guaranteed.
Crude oil prices have been at an elevated level for about two months now, and the worst part is that they can stay at higher levels for a longer period.
Shell CEO Wael Sawan said that the Strait of Hormuz blockade-led oil shortage is likely to drag on for months and possibly into 2027.
“We are talking about roughly 900 million barrels that haven’t been produced in the last couple of months, and that’s been replaced essentially by stock drawdown,” Sawan said in an interview with Bloomberg TV.
India, which imports about 85-90% of its oil requirements, is certain to take a hit. Experts warn that inflation may rise while economic growth and corporate earnings may lose momentum.
“Brent crude at $110 is negative for India. As long as crude price remains elevated, the downside risk to India’s growth and the upside risk to inflation will remain high,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
“Even though there are important developments happening in the Gulf region, there is no solution to the energy crisis caused by the closure of the Strait of Hormuz. UAE’s decision to quit OPEC might have a bearing on crude prices in the medium term, but it is unlikely to ease crude prices in the near term. There are indications that the US-Iran stand off may continue much longer,” Vijayakumar noted.
Ajit Mishra, SVP of Research, underscored that the Nifty’s move to snap its four-month losing streak signals underlying resilience, but the sustainability of gains will be tested by external headwinds. Elevated crude oil prices amid the US-Iran conflict pose risks to inflation and could delay monetary easing, thereby capping valuation expansion.
In the medium term, Mishra expects markets to remain range-bound with a slight positive bias, supported by domestic liquidity but weighed by a gradual earnings recovery.
“The market is transitioning into a more selective phase, where domestic-focused sectors may outperform, while crude-impact sectors and IT could remain under pressure,” said Mishra.
“Overall, the broader trend remains constructive, but the near-term strategy should be to adopt a ‘buy on dips’ approach rather than chasing rallies, until there is greater clarity on crude trajectory and global macro stability,” Mishra said.
“The Nifty 50 can potentially move towards 25,000 and may even cross that level. However, for the rally to sustain beyond 25,000 and extend further, crude oil prices need to cool off to around $70–75 per barrel,” Shrikant Chouhan, the head of equity research at Kotak Securities, told Mint.
Prospects of a poor monsoon loom
India may see one of its driest monsoons in years in 2026, which can weigh on rural demand and potentially increase food inflation.
Skymet has predicted rainfall at 94% of the long-period average, while the India Meteorological Department (IMD) expects it at 92% of the 50-year average because of the El Niño effect.
According to Namrata Mittal, CFA, Chief Economist at SBI Funds Management, the risks are real and raise near-term uncertainty. She, however, added that it will more likely cause growth moderation and market dispersion than a sustained downturn in 2026.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
