Surge in crude oil prices may dent Nifty earnings: Report

NEW DELHI: Elevated global crude oil prices above $90 per barrel could begin to significantly weigh on earnings of Nifty companies, a report has said.

According to Bernstein analysts' estimates, for every $10 per barrel increase beyond $90, Nifty earnings may decline by 2-3 per cent, with the impact worsening sharply at higher price levels. While crude has a limited direct linkage to the index, its broader macro impact, including inflation, currency depreciation and policy responses, becomes more pronounced at elevated levels, it noted.

Bernstein said within the $60-$90 per barrel range, the effect on earnings remains gradual, with long-term earnings growth potentially slowing from 10-11 per cent to around 7 per cent.

However, once crude moves beyond $90, the pressure intensifies as rising inflation begins to erode consumption and savings, particularly impacting consumer-oriented sectors.

Higher oil prices also weaken the rupee, increasing costs for import-dependent industries such as pharmaceuticals, cement and chemicals, while rising logistics expenses further compress margins across sectors.