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Escalating crude oil prices keeps market under pressure

ICICIdirect Research 24 Jul 2026 DISCLAIMER

Escalating geopolitical tension and resultant flare up in crude oil prices weighed global sentiment. Consequently, Nifty pared last week’s gains. Persistent weakness seen in Index heavyweights like HDFC Bank and Reliance has kept the Nifty under pressure.
Broader market extended its breather for the second consecutive week. Midcap, Small cap index lost ~1.5% each. Sectorally, auto, consumption displayed resilience while financials and realty pared gains.

Week that was:

  • The recent sharp up move in crude oil prices have resulted into extended correction in the Nifty consequently breaching below one-month rising trendline coincided with 50 days EMA, indicating a pause in current upward momentum.

What we expect:

  • The lack of follow-through strength resulted into prolongation of consolidation in 24200-23600 zone over past six weeks. Only breach of three months rising trend line placed at 23600, would result in extended correction towards 23300 zone
  • Going ahead, global macroeconomic trends will remain the primary driver of market direction.
  • Amid persistent geopolitical tensions, crude oil dynamics and the Indian Rupee are the key variables to track. A pull-back in crude oil along with rupee stabilization will provide cushion for the Nifty.
  • Structurally, the Nifty has been consolidating within a 1,500-point over the past quarter. Defending the pivotal 23,000 mark is crucial to establish a higher base, which would set the groundwork for the next leg of the secular uptrend.

Key Monitorable:

  • Historical data of Brent crude oil suggest that bounce after a sharp decline in amid geopolitical conflict (Iraq war 1990-91, Russia-Ukraine 2022) typically cap around 40%. In the current scenario, Crude has rallied 40% from recent low of $70
  • Empirically, after such a bounce crude undergoes consolidation and eventually revisits the panic low in subsequent quarters. Therefore, we believe falling crude oil would be the primary catalyst to reignite momentum in equities.
  • US Federal Policy

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