Monthly Market Outlook 12th June 2026 by Bajaj Finserv AMC
• A prolonged conflict could raise risks through higher energy prices, supply-chain disruptions and elevated logistics costs, which simultaneously could slow economic activity and raise inflationary pressures.
• The external sector is likely to come under pressure as a higher oil and gas import bill, weaker export demand and softer remittance inflows widen external imbalances and weigh on the rupee.
OIL SHOCK HAS NOW REACHED CONSUMERS
• The government's excise duty cuts initially absorbed a significant portion of the oil shock through excise duty cuts.
• The burden, now is gradually being passed on to consumers, with petrol and diesel prices raised by ?7.4– 7.5/litre through four successive hikes in May 2026.
• The economy’s effective breakeven has now been raised to $100/bbl. If crude prices are to sustain above this level there would be a likelihood of further fuel price hikes and broader inflationary spillovers than those already being felt.
The recent depreciation in the INR has been driven by elevated crude oil prices, weaker foreign capital inflows and heightened geopolitical uncertainty, all of which have increased pressure on India's external balances.
• Unlike previous crises driven by high inflation, large fiscal deficits and external vulnerabilities, the current pressure stems primarily from external shocks such as elevated crude prices, weaker capital flows and geopolitical uncertainty.
• The current challenges appear largely cyclical rather than structural in nature.
• As these shocks recede, India’s underlying strengths should once again provide renewed strength to the economy.
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