Mumbai (Maharashtra) [India], July 31 (ANI): Surging crude oil prices driven by Middle East geopolitical tensions will act as a key ceiling for Indian stock market rallies, though strong valuations and support levels near 23,800 will cushion major downsides, Shrikant Chouhan, Head of Equity Research at Kotak Securities, said in an exclusive interview with ANI.

Analyzing the macroeconomic risks posed by elevated oil prices, Chouhan outlined scenario-based projections for inflation, GDP, and currency volatility.

'In the base-case scenario, if crude prices sustain above the mark of USD 85... it will start impacting the balance of payments, the current account deficit, and eventually inflation,' Chouhan stated, noting that retail inflation could climb to 4.8-5.2 per cent from 4.1 per cent. He added that if crude surges past USD 105 per barrel, real GDP growth could slow to 5.5-5.8 per cent.

On the currency front, Chouhan assured that despite macro headwinds, the Indian Rupee is unlikely to breach the triple-digit mark against the US Dollar.

'In case current crude prices sustain at USD 85 per barrel, then we are expecting our currency to maximum depreciate to levels of 97... In case crude prices jump to USD 105, then we are predicting 98 should be the worst-case level,' he explained, pointing out that an easing of war tensions could see the currency appreciate back to 94-94.5 levels.

Detailing his outlook for domestic equity markets heading into the weekend and early next week, Chouhan expects near-term consolidation with a buy-on-dips approach.

Chouhan identified 23,800 as a robust technical support zone and projected the Sensex/Nifty to trade within a broader consolidation band of 23,000 to 25,000.

Highlighting sectoral support in BFSI and IT, he emphasised that foreign institutional investors (FIIs) turning net buyers over recent sessions signals a capital shift from overextended global AI stocks to value-driven IT services and domestic markets. (ANI)