India imports nearly three-fourths of its crude oil requirements. Oil accounts for about one-third of our import bill. No wonder higher global oil prices are considered a big negative for Indian share prices.
The recent decline in global commodity prices is thus good news for the Indian economy. But Nymex crude futures continue to trade way above their 200-day moving average (DMA), a key parameter used by technical analysts to assess the strength of a market. Gold futures—a proxy for commodity action—are also trading above their 200 DMA. Meanwhile, the Nifty share index is below its 200 DMA.
This is neither a plea to buy or sell shares nor a view on what will happen on Dalal Street in the next few weeks. That we leave to the brokerages. Our limited observation: the fall in commodity prices is still modest compared with the steep rise we have seen over the past year.