Nifty may fall to 21,000 if crude stays at $100 for 3-4 months: Emkay Global

The Nifty 50 could decline to around 21,000 -- around 10% lower from current levels of 23,480 -- if crude oil prices remain elevated at about $100 per barrel for the next 3-4 months, according to a report by Emkay Global Financial Services.

The brokerage noted that this level would be roughly one standard deviation below the index’s 10-year average price-to-earnings multiple, indicating downside risk if high oil prices persist.

The Nifty50 index has already corrected 8% month-to-date, wiping out nearly ₹34 lakh crore in investor wealth, as equity markets remained under intense pressure in March amid sustained foreign institutional investor (FII) selling, rising crude oil prices and escalating geopolitical tensions.

The brokerage flagged a twin impact on corporate earnings from elevated oil prices -- demand destruction, both domestically and globally, and margin pressure due to higher input costs.

While no sector remains immune, Emkay sees technology, pharmaceuticals, metals and power as relatively better placed, supported by structural demand trends and pricing resilience.

On the other hand, oil marketing companies (OMCs), utilities, airlines and automobiles are likely to be more vulnerable to sustained high crude prices.

Hormuz blockade, $100 crude pose fresh risks to India

Escalating tensions in the Middle East and the effective shutdown of the Strait of Hormuz by Iran have heightened risks for global energy markets, with crude oil prices turning sharply volatile and hovering around $100 per barrel, Emkay said in its report.

The brokerage said the conflict shows no signs of easing, with market optimism around an early resolution fading. Brent crude futures for September 2026 have already risen about 10% since March 10, reflecting growing concerns over prolonged supply disruptions.

With no clear off-ramps visible, Emkay noted that while the U.S. may struggle to achieve its strategic objectives, Iran could sustain pressure by continuing to block the Strait of Hormuz. Although a negotiated settlement remains possible, the situation may worsen before any meaningful de-escalation. Even so, a ceasefire could trigger a sharp correction in crude prices and a relief rally in global markets.

OMC profits could decline by about 9%

For India, the impact of sustained high crude prices is expected to be significant, with limited policy flexibility. According to Emkay Global, any increase in fuel prices at the pump may be delayed by 6-8 weeks, but would become inevitable if crude remains above $100 per barrel for an extended period.

Over the next three to four months, the burden is likely to be shared between higher fuel prices, reduced profitability for oil marketing companies (OMCs), and potential tax cuts by the government.

The brokerage estimates that for every month crude stays near $100 per barrel, the current account deficit (CAD) could widen by 9-10 basis points of GDP, inflation could rise by around 50 basis points from the primary impact alone, and OMC profits could decline by about 9%.

The brokerage’s top-down analysis suggests a potential downgrade of about 1.7% in earnings for the Nifty 50, based on the impact seen during the Russia-Ukraine war. Additional second-order effects could shave off another 1–2%, it said.

Small- and mid-cap companies are likely to face greater earnings risks in such a scenario, it added.

LPG supply disruptions add to concerns

The blockade has also disrupted India’s LPG supply, raising near-term concerns over availability. Government efforts to divert propane-butane streams toward LPG production could increase domestic supply by around 28%, but may create bottlenecks in downstream sectors such as chemicals and pharmaceuticals.

While domestic cooking gas supply is expected to remain stable, industrial and bulk consumers could face disruptions over the next 4-6 weeks. Demand management measures may offer limited relief, but the supply-demand balance remains fragile in the near term.

An extended conflict could exert pressure across financial markets in India, the report warned, with elevated crude prices likely to weigh on macro stability, corporate earnings and investor sentiment in the coming months.

The brokerage added that some of the downside risks are already priced in, but believes banks and NBFCs have been disproportionately corrected, offering an attractive entry opportunity even before crude prices stabilise.