Stock Market May See Further Correction if Oil Prices Remain Elevated, Warns Mangal Keshav Financial's Chairman

Market Uncertainty: Crude Oil Prices Remain a Key Risk for Indian Stock Market

The Indian stock market has shown signs of recovery in recent weeks, with the Nifty ending largely unchanged on April 20, despite touching its highest close since early March. However, despite these gains, Veer Growth Fund CIO Paresh Bhagat believes that elevated crude oil prices remain a key risk for the market.

According to Bhagat, geopolitical uncertainties are still prevalent, and the market's recovery is not yet convincing enough to call a final leg of correction. The market has already recovered meaningfully from the panic phase, and valuations are no longer as attractive as they were 10 days ago. However, the bigger concern is that geopolitical signalling remains fluid, and U.S. policy communication has been shifting quickly.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The Indian equities' performance is being driven by strong domestic earnings, but geopolitical risks and crude oil prices are still capping conviction. From an investor's perspective, this is not a market to chase aggressively after a bounce. If there's a renewed decline, that could offer a better entry point.

Bhagat emphasizes that the key variable isn't just the conflict headlines, but whether they push crude higher in a sustained way. As long as oil remains elevated, the correction risk in India isn't fully behind us. Foreign investors also continue to pull money out, as oil risk, rupee volatility, and earnings concerns remain in play.

For the rally to sustain, three things matter: first, the rupee needs to remain stable or strengthen, as a weaker rupee creates discomfort for foreign investors and raises macro concerns. Second, FII flows need to improve. Domestic liquidity has absorbed selling well, but a healthier and more durable rally requires foreign money to stop treating India as an exit market. Third, crude needs to cool off, or at least stop rising, since high oil directly affects inflation expectations, the current account, and overall sentiment.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Apart from geopolitics, the biggest non-geopolitical risk right now is still persistent FII selling. It's something investors really need to keep a close eye on, because foreign institutional behaviour usually reflects both valuation comfort and overall macro confidence. The fact that foreign investors sold a record ₹1.8 lakh crore worth of Indian assets in FY26 tells you this isn't just a market reacting to headlines – there's a deeper layer of caution around valuations, oil, and macro stability.

India remains a long-term story, but with one clear condition: oil must not stay structurally high. If crude oil remains elevated for too long, it weakens India's macro position by simultaneously impacting inflation, growth, the fiscal balance, and the current account. However, if crude moves back toward the $60–70 range and stabilises there, India stands out again as one of the more compelling long-term growth stories among major emerging markets.

Veer Growth Fund's newly launched AIF is designed to bridge the gap between private-market growth and public-market liquidity. The fund focuses on late-stage pre-IPO, anchor, and select special-situation opportunities in high-quality companies at reasonable valuations before they list.