A combination of crude oil prices hovering around the $106-per-barrel mark, the rupee sliding to a fresh low of 96.2 against the US dollar, rising bond yields and growing inflation worries is creating a difficult environment for Indian equities.
Although corporate earnings and domestic economic indicators continue to show relative strength, investors are becoming increasingly uneasy about the wider impact of expensive energy on inflation, government finances, liquidity and the Reserve Bank of India’s future policy direction.