Rugged Road Ahead For Investors

The Indian economy has never done well when global crude prices are high. The reason is simple. India imports over 80 per cent of its crude, and 30 per cent of its gas. Those are necessary goods. So, the volume of imports cannot be reduced. As energy gets more expensive, the cost of imports outruns earnings from exports. The rupee comes under pressure and falls. Other imports also become more expensive in rupee terms. That causes inflation. The vicious cycle continues until crude prices fall. The stock market also rarely does well in a general elections year. Investors hate political uncertainty. The ruling government could be good, bad or indifferent but the prospect of change always makes investors nervous. The price of crude is now up, and it is likely to climb higher, given global tensions. General elections are due within a few months. The stock market has lost quite a lot of...